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spreading broadcast the news of the course at the moment is determined more by of business in a given field could be devised. habit or idle interest than by any pressing What the Stock Exchange does the country business of their own. On opposite sides knows, and knows it the next moment. of each large group stands a reporter with

poised pencil and ready pad. BEFORE THE OPENING-A BUSY BEEHIVE But we have kept the venerable chairman

TEN O'CLOCK-THE EXCHANGE IS OPEN and his gavel waiting long enough. While Precisely at the sixtieth second the gavel we have been considering some collateral falls and the big gong whirs out the signal. questions the Floor has been filling. The On the instant the groups are galvanized into telephones along the west wall are manned action. The hum rises several tones in pitch by clerks. They are busy answering calls and many degrees in volume. Here and from their members' offices, pushing the there a single voice sounds above the rest buttons to call the members to the telephone, shouting a bid or an offer or the magic word and sending notes across the Floor by hurry

* sold or “take the lot." ing messengers. Behind the rail along the Each crowd sways and vibrates, each memsouth side where the “arbitrage " business ber intent on his own mission, pushing and is carried on—the business, that is, of dealing wriggling to keep near to the center of the between New York and London exchanges, mass, ready to seize his opportunity when it and more specifically of taking advantage

For on the Floor opportunity is a of the temporary differences in price of shy and rapidly fleeting bird on whose tailthe same stocks in London and in New feathers it takes a steady nerve, a quick eye, York—other clerks busy receiving and nimble fingers to drop the salt of capture recording, and comparing the prices ruling In half a nute we see a reporter turn on the London Exchange, which has now briskly from ih ,'-.! rowd below us, writing been open for five hours. On the Floor as he goes, and wickly to the nearest itself shifting groups of members, most of pedestal. The ha. : he key taps out a them young, a few of them veterans by their message, and the opening 2.0 of Steel

goes white hairs or lack of them, are gathered at out to a waiting world. the strategic points. Here between posts The hand of the clock has barely made a one and five is the Steel crowd; just beyond five-minute advance before the din begins to is the Union crowd ; over near the center of run down the scale, the crowds to subside the Floor the Reading ; and near post eight into quiescence, the members to relax their the Copper crowds. In between and all eagerness. The flurry which always marks around these nuclei are moving currents of the opening has passed.

Here an

" arbihumanity made up of members, reporters, trageur "steps from the crowd to his clerk and the gray-uniformed messengers.

behind the rail, handing him a report of a If

you have ever seen one of those porta- transaction to be sent off to London by cable. ble frames from a beehive which are put up

There two members step aside to compare in in a window for observation purposes, you

quiet their notes on a trade which they have know something of what the Floor of the made a moment ago in the stress of the Board Room looks like just before ten o'clock. opening. Other members who have found There is the same incessant motion of the their opportunity in the whirlpool scribble off whole mass like the moving of the restless reports which messengers take across the Floor waters of the ocean when a choppy sea is to their telephones. The groups still hold running. There is the same apparently aim- their form, but they have become groups of less moving to and fro of the individual units. men waiting, like Mr. Micawber, for " From the whole rises the steady murmur of thing to turn up." a beehive on a summer day.

The market has opened, and opened, let As the hand of the clock marches toward us hope, if we are “long” of the market, ten the members of the different groups 'strong.” If we, perchance, are

on the become quiet and intent. Some of them, "short” side, a “ weak” opening is our purpose showing in their faces and their prayer. bearing, inch their way persuasively toward

THE ACTIVITIES OF MR. X the center of the “ crowd ” they are in. Since we have been in the gallery there Others stand carelessly on the outskirts, has been one figure in the shifting pattern their attitude suggesting that their place on the Floor on which we have tried to keep


an eye. The member who is our guide in this will buy ten thousand New York City 4 12 inquiry into the workings of the Stock Ex- per cent bonds and send a report to Mr. X's change has shown us before he went on the telephone clerk in the booth across the floor Floor the orders which he has to fill :

that he has executed the order. That dis1. Buy 10,000 New York City 472s at poses of order Number 1. the market.

From the bond crowd Mr. X steps to 2. Sell 100 St. Paul at 108.

Post Number One. There he finds another 3. Buy 200 copper at 7478.

acquaintance, one of those brokers who are 4. Buy 100 Steel at the market.

known as “specialists.” The member of the 5. Buy 300 Union Pacific at 149.

“bond crowd” is a specialist in bonds—he Now, here are five transactions to be made buys and sells nothing else. But the true at different points on the Floor. Our Mr. X “specialist,” to whom that name is regularly (let us call him that, chiefly because there is applied, deals only in a single stock, or in no member of the Exchange whose name some cases in several stocks traded in at a begins with X), of the firm of commission single post. All day he sticks to a single brokers, X and Y, is an active individual, but “post,” dealing only in Steel, or New York he has not even a dual personality, much Central, or Copper, or Reading. Ours is a less a quinquipartite one. Obviously he St. Paul specialist, and to him Mr. X hands a cannot be in five places at the same time,

second slip : and it is not impossible that all five of these trades must be put through simultaneously. For no man can predict when the market will touch a given figure for any given stock.

What shall he do? How execute his orders without splitting himself into five parts ?



$2 BROKER He comes on the floor at ten minutes before ten. He first goes to that part of the Floor along the east wall just below our feet as we stand in the gallery. There, on a platform, two steps above the Floor, is gathering the “bond crowd," a little group of members who spend their time buying and selling bonds and bonds alone. To a man he knows in that crowd he hands a slip like this:

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This trade is now in his hands. St. Paul closed last night at 10734 bid, 10776 offered. If the market opens strong to-day, he may be able to sell the hundred shares at 108 at or soon after the opening. If it is weak, he may wait till late in the day before the price touches 108. Perhaps the trade cannot be made to-day at all. If he does make the sale, he will report directly to Mr. X's telephone clerk. For his services in the transaction he will receive a commission of 1-50 of one per cent on the par value of the stock, or $2. This disposes of order Number 2.

Order Number 3 Mr. X hands to another trusted acquaintance who becomes his lieutenant for the time being. This man belongs to another class of members, perhaps the hardest working of them all. He is known as a $2 broker, for his commission on the orders he executes for other brokers is


His friend in the bond crowd, as soon after the market opens as he can make the trade,

$2 on each hundred shares. He is a rover, ing hour or after the closing hour is against executing orders for other members all over the rules of the Exchange. This preliminary the Floor. He too receives a slip from negotiation, however, permits Mr. X to comMr. X:

plete his purchase at the moment the mar

He puts down the name of the house with whose representative he has traded on the slip in his hand :

ket opens.

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As the market opens he will be found boring into the Copper crowd, offering to buy his 200 copper at 7478 until the market comes to his price and some fellow-broker cries “sold” to him, or waiting until the

He then slips away to the Union Pacific stock is “ offered down” to his stipulated

crowd to fill his other order. There he price and then shcoting a terse“ take two

finds that Union, which closed the night hundred” at the offerer. If he succeeds in

before at 151, influenced perhaps by a pessicompleting the trade during the day, he also mistic rumor as to the progress of the disreports directly to Mr. X's telephone. This

solution plans of the Union Pacific-Southern disposes of order Number 3.

Pacific merger, has broken on the opening.
The opening price is 14934. He accord-

ingly shouts into the little pandemonium The last two orders on his list Mr. X that is surging at the center of the crowd, decides to handle himself. With that in "9 for 300," but no one pays any attenmind, he slips into the “ Steel crowd ” which tion to him for the moment. His price has already formed between Posts One and is too far below the market. But a small Five and the “ arbitrage " rail. His order to selling fever is on, and eighth by eighth, buy 100 Steel sets no particular price, but is to the accompaniment of shouted offers, eager to be executed “at the market." If it is responses of “ Sold,” Sold,” of waving filled, therefore, at the opening price, the arms with upraised fingers to indicate the instructions of his client will be carried out. number of “ lots " the man at the other end As he waits in the crowd for the opening, he of the arm is prepared to buy or sell, of lunghas the good fortune to rub elbows with a ing shoulders and digging elbows, as each fellow-broker who says to him, “ I'll sell 100 man strives to hold his place in the shifting Steel at the opening." "I'll take your 100 crowd, the price is hammered down until it at the opening," replies Mr. X. So the is close to 149. Then our worthy guide trade is agreed to, since what one has to sell springs more vehemently into action, branthe other is authorized to buy, and both are dishing three upraised fingers and striving to directed to trade at the opening price, the price, make it clear above the racket of his neighthat is, at which the first sale of the day is bors' voices that he is prepared to buy three made ; but it cannot be finally consummated hundred shares at 149. As he shouts he until the gavel has fallen—first, because they suddenly feels his arm clutched by a hand do not know what the price is to be until the from behind, and, turning at the magic word market has opened and a sale has been made, "sold” in his ear and recognizing the owner and, second, because trading before the open- of the hand and voice, he drops out of the


crowd and scribbles down on the slip on watching the tape. This seeking of news of the which is already a record of the order the market direct from board members seems like name of the house from which he has bought an obsession with some customers, and, howthe stock.

ever much it may interfere with his work on the Floor, the broker cannot neglect to humor the peculiarity. Gratified customers mcan increased business and a larger volume of commissions. A customer who feels himself neglected by his broker has many other brokers to choose from.

Toward eleven o'clock Mr. X is called to his telephone to receive a message from one of the big downtown banks. He is the agent through whom this bank lends money on the Floor to brokers who have margin trades to finance for their customers.



Barnum Bailey



Perhaps this would be as good a time as any to describe trading on margin and to consider for a moment whether it is a legiti

mate and essential good, a crying and indeMeanwhile the other party to the transaction fensible evil, or perhaps an inextricable comhas jotted down on his pad a similar memo- bination of the two. randum on his slip, putting the name of X and Trading on margin is, broadly speaking, Y in place of that of his own firm. That is all what makes widespread speculation possible. there is to it. A transaction involving forty- But let us not jump to the conclusion that four thousand seven hundred dollars is entered therefore it is unqualifiedly bad. Perhaps into as easily and simply as that. Nothing speculation itself is not quite such an unpasses between the parties to the transaction mixed evil as it sounds in the common ear. but a word or a nod or a gesture. No record Trading on margin may be described as is made but two scribbled sets of memo- buying stocks on mortgage.

Stocks may randa; there is nothing to “ bind the bargain,” also be sold short on margin, but in that nothing to hold either party to it but his word.

case the analogy is not quite the same, Buying and selling on the Floor are done on though the underlying principle is. Let us honor. A broker's word given there is as consider the case of buying. good as a written contract. "Welshing" is A customer has a thousand dollars with unknown.

which he wishes to buy stocks in the hope

that they will advance in price and he will His business of the morning done, this therefore make money out of them. He being a dull day, Mr. X has nothing to do knows that for his thousand dollars he can buy for a time but wander about the Floor chat- not mcre than ten shares of any stock selling ting with his friends, listening to rumors at par if he buys them outright. On ten and gossip, watching the progress of the shares his profit, on any advance that would market. Now and then as he glances from be likely to come soon, would be very small. habit at the number-spotted blackboards he He therefore tells his broker that he wishes sees his own number displayed. Off he to buy on margin. After consultation with steps to his telephone to receive a message his broker he decides to buy Steel Common, from his office partner, to get an order which which was selling the night before at 5934, has just come into the office by letter, tele- for he believes that Steel is more likely to graph, telephone message, or personal visit, go up than down. On this purchase he or to answer the personal inquiries of an must “put up” a ten point margin. He anxious customer who believes that the board must deposit, that is, for each share of stock member from his point of vantage on the that is bought, ten dollars. His thousand Floor must know much more of the direction dollars, therefore, will “ margin ” a purchase in which market winds are blowing or of one hundred shares. He gives the order are likely to shift than any one who is merely to his broker to “buy 100 Steel at the






CPU 112 200.32 300.1471 163_600.491 106% 200.125! 313.


THE TAPE AT THE OPENING This shows that on June 2 the first sale after the opening was 100 shares of American Car and Foundry Company Preferred at 112. The next sale was 200 shares of Missouri Pacific at 32. Then followed 300 Union Pacific at 147%, 100 Nevada Consolidated Copper Company at 16, 600 Utah Copper Company at 4914, 100 Chicago, Milwaukee, and St. Paul

Railroad at 106%, 200 Great Northern Railway Preferred at 1254, and 100 California Petroleum Corporation at 37%4.


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THE TAPE HALF AN HOUR BEFORE THE CLOSE These two sections of the tape just after the opening and just before the close on Jụne 2 show the decline in prices which took place on that day when extensive European liquidation sent prices down rapidly. This decline in prices was led by Canadian Pacific, the sign for which on the tape is CA. It will be noted that in the morning it was selling at 2194, while in the afternoon it was down to 21334 The decline affected also stocks all along the line, though not so seriously. Steel (US) which was selling in the morning at 585 had dropped in the

afternoon to 57' ; Pennsylvania (PA) dropped from 105% to 108; Reading (RG) dropped from 159% to 158; Union Pacific (U) from 147% to 144%.

THE CLEARING-HOUSE PRICES ON THE TAPE These are the prices which are used as a basis for settlement through the Clearing-House. The Clearing-House price is always the nearest even price to the last sale made before the close in each

Clearing-House stock. If, for instance, a stock closes at 150%4, the Clearing-House price will be 150; if it closes at 150%6, the Clearing-House price will be 151.

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