Mower County transcript. [volume] (Lansing, Minn.) 1868-1915, 1869-10-21

A1ou GULL uoOsok LAD sOsssA AAueOtcuuo6Ss
THE "LoNa" AND THE "sHoRT" OF THE NAT
Frequently dealers, tempted by the high
price prevailing and the prospects of a de-
cline, sell more gold than they have got,
trusting to make up the deficiency when
the prizes falls. Such dealers ore said to be
'selling Short" and one who has so sold is
''short" exactly the amount he has sold be-
You'd what he actually has. On the con-
trary, the dealer who has gold on hand un-
sold is ''lonR:" Cash gold" is the real
coin, in contradistinction to Buppositious
amount bought, or sold, but which is never
expected to be delivered or received, but
merely the difference between the price at
the time the transaction was entered into
and at tho time Of delivery. Thus one
dealer sells 10000 at two O'Clock to-day at
13l. The clearance takes place at noon to-
morrow, when the price may be only 100.
The seller thus makes one cent on dollar,
and has claim against the purchaser for
800 at the time of settlement Or if the
price advances cent meantime he loses
500. -
'sMARo1Ns."
A "margin' has the same significance in
gold. stock OF produce transactionsi It is
simply d certain percentage deposited to
cover fluctuations Thus a broker who has
sold 500, 900 gold at soy 1876. is permitted
by the rules of the Exchange to demand a
margin from. the purchaser, should the
market be declining. until the gold can be
delivered andthe contract consummated
II an outsider conceives q desire 10 ,dabble
in gold or stocks, he must 60 to broker
and employ him to make the transactions
We win suppop thst gold ia, sslIing at l3O.
Nh. John Smith thjnks the price win soon
advance, and That by buying now he Can
speedily make "a good thing" He goes TO
. broker aud orders him to buy, lot us sup
pose, $500, 600 at tho market ,.price, 100.
Thi4gold will, therefore cost $3.50, 600 in
currsneyas The broker before he will nm
dertake the Transaction, requires Mr.. Smith
to put up margin, that is, certain per
cent. of this annsT 5, 10, Is Or Copper cent,
as the case'mSysbe. Z Ga gold, s per cent, is
consldered good margin. On stocks 20
and rs per cent. is frequently demanded.
In the case supposed, Mr.. Smith is called
upon to deposit with the broker hia certi-
fled check for so, 500, being per cent. on
the currency value Of the gold to DO bought.
This is the ''margin" on which he purchas-
es half a million Of gold. The broker makes
then takes the gold certificates he receives
to bank and deposits them as collateral
for loan to replace the money he has IN
din tho operation. '..-i
"a j ~'sdu4 GOLD UP.
If the market price of gold advances,
Mr.. Smith may remain tho nominal owner
of $500, 600 gold as long "a he pleases He
is 'long" to that amount. When he thinks
gold will advance no higher, he orders his
broker to sch. The broker sells, we will
suppose, ut 1885, and realizes $675, 900 in
currency. With this sum he first pays his
loan at the bank, and receives back the cor
tilicatOs. Then he deducts certain per
centage for his services in buying and sell
ing. and interest ON the -iull amount, less
the paassin, Tor the time the gold ms sscas.
ried," and payssto Mr.. Smith what II <lelS.
Smith receives back the $50, 400 he tlspos-
tied as q margin" with $25, 900 profits On
the transacti0n,f loss the brokers commits
sion and interest -, ';E:--..s sTs <
81 10. GOLD DOWN. a.. =.
'8at ~ after the purchase il made the
nlasketsahhs'oH"-that 10, it the price Of
g6ld dec1iHS-rtf;e. broker win ..cstry",. the
gold only until the difference between the
purchase price, and its deteriorated value
shall amount to the SUM deposited as q
margin, less commission and interest,
when he: notifies Smith to deposit more
margin. II Smith fails to do this, tho
broker proceeds to ''sell him out" at once.
That il, he sells the gold, pays his bor-
r6wed money, pockets hia commission and
interest, and le.ives Smith out Of pocket
exactly $50, 500, -, - >, .,c.tr
GOLD CERTIFICATEs
In tha1scent gigantic operation in cold.
of course tho reader understands thht nd
shining metal was seen on tho street ThS
Gold Exchange Bank has that locked up in
its vaults, or something else to represent
tificatea on the demand of tho dealers.
That il, Brown 4 Johnson, on the settle
mont of days business ut the Clearing
House, which was this Gold Exchange Bank,
had $780, 600 in gold duo them. That
bank, at their demand, would issue to
them certificate OF deposit for that
amount III gold. That certificate was re-
deemable by tho bank in gold on demand,
and waS therefore AZ good NJ gold, besides
being much more convenient to handle and
carry about.
LOANIN0 GOLD.
The clique thai created tho late furore
in the market commenced operations long
before the crisis came. They had been
purchasing gold for more than week at
prices running from 1872 to 135, at which
the bulk of their purchasers were made.
This gold they loaned AZ fast ~ they
bought it, requiring the borrowers to put
mp margin AZ security equivalent to the
current price Of the metal. When they
had s30,OO0,0OO or S4O,O00,Oes thus