Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1869-10-06

The game Of the bears was that Of sci
/ Ing gold +" short" A
let readers again attend while we a
tempt to explain, for the COMPREHENSIVE
of minds outside of Wall street, what ii
| process of +" selling short was in thos
days.
The bear clique-more than equal !
wealth to the bull clique, of whose exis
ence they had not the slightest knOwledg
engaged in this way: On a certain da
| gold was, say, firm at lS5. The bear
| through their brokers, sold, respectively
/ a hundred Thousand, ,~or three hundre
Thousand dollars, gold, to parties wantin
it, agreeing 10 deliver the gold next da
at noon for ISL per cent. below tn
( price on the day of sale.
To the inexperienced mind, this agree
/ ment of the bears to deliver such a
amount of gold at one per cent. below it
| current market value must, at frs
\ thought, seem inexpressibly foolish
| But how foolish must 1t seem when it
considered that, at the time when tn
| bears entered into the agreement, no on
I Of them had any gold IA has possession
! That, be 1t remembered, was the truth
tine bears who sold the gold, promising Z
/ deliver it to the purchaser on the morrow
| had no gold 10 sell !; and, except that theJ
were rich men, able to own the gold, anc
competent TO get it in someway and dc
| liver it at the appointed time, they wOull
have had no more right to sell the gnle
than any boot-black, with only his day |
earnings in his pocket, in the City Hal
Park
The sale was made: gold had to be De
Iivered; the sellers the bears had no gold
They had, first, to obtain the gold tc
deliver, and thus make good their bargain
and their credit.
They bad saeo,d m seen "a Themselves
against a loss of the one per cent. differ
enGe hetWeen the price of gold on the day
of agfeemeat aud the price they had
agreed to deliver il for. Or eiss they
were, inevitably, losers by the transaction.
The first thing the bears did, after sell
ing short in the way described, was TO
borrow the gold wherewith to make good
their deliveries. This borrowing process
was effected through their brokers, with
brokers representing th6 parties having
the gold to loan. Tho thing that Inc beafs
now hoped and expected was, that the
gold market, under the influence of their
short sales, would decline. so that they
could 90 and buy next day, o. the day
following that, an amount of gold equiFa-
lent to that they had sold and borrowed
for, say, 1924 or 1873. If they could do
this, they could return their borrowed
gold to the lenders and retain profit Of
one-half or one per cent.
To the chagrin OF the bear operators,
their short sales failed to weaken the gold
market, So they had to renew their loans
day after day, and trust to the future.
Weeks passed; they continued their short
sales and continued borrowing, aud still
the market, although vacillating and ap-
parently weak, did not once descend be-
low the rate which existed when they first
began their operations.
,F,sg
ly daZed and blind.
They failed, all the while, to find out
the fact that the bull clique of operators,
with ten or twelve millions of gold in
their possession, were actually loaning
thsm, through one set of brokers, the
gold that they borrowed, and buying back
again, through another set of brokers, the
gold that they sOldi
The bears at last became enragea. They
formed pool on Wednesday Of last week
10 sell 3I2, 600, 0e0 of gold short. They sold
il short; and without their knowledge the
bull clique took nearly every dollar of 1t.
they had to borrow the gold and the bull
,lique lent them nearly every dollar, re-
,eiving it back again, of course, on the
lay of delivery, through their brokers
who had bought it.
Still the market, thus entirely in the
hands Of this tremendous clique of bulls,
NOuAu uDl 20 uOWn III idkOE OF tuB DEdrt.
On the contrary, the immense short sales
If Wednesday disclosed to the bulls, more
ully than before, how completely the
bears, and all classes ofspeculatOrs besides
outside the bull ring, were in their tthe
PULLS tolls.
They raised the price Of gold in the mar
Iet.
This was terrible move. The dilemma
II the bears WAS now desperate oue. For |
We must not omit to consider that the |
,ears, who had Kept on borrowing over |
nd over again the gold necessary to make |
,ood their contracts, had, sonic time Or |
mother, to buy the gold to return finally 4
o the lenders. Their hope and endeavor |
ad all along been to break the market /
own, buy the gold at a reduced rate, and /
nd thus make their profit. But, when |
he market rose against them, Imagine The |
Onsternation of these men. who had by /
hat time engaged in short sales amount |
ng to millions upon millions,
They made one more venture-anotfer /
hort sale Of Ave millions or more. Again
he bulls took it. But when the bears /
vent to borrow the gold to make this last
ale good the bulls stopped lending; there /
las no gold.
This was on Friday,
Dismayed and frantic, the bears then
ushed to the Gold Room To buy gold, and
ct out Of the whole business. Their ne
essities were too well known. Up went
he price, higher, higher, higher The
smpest threatened TO sweep them all into
Then it WAS that Secretary Boutwell,, /
he tardy friend Of these bears Of the
oval League, came to the rescue with
le promise of four millions wherewith to |
slieye their needs. Then it WAS that the
" and smoke descended upon Wall
treet and its envirOns, which still makes
hat region appear chaotic.
The bulls ran up gold too high-there-
IRE so many failures resulting from the |
oldtransactiOns. Many Of the benighted
ears who bid for and agreed to take gold
{ the extreme rates on Friday found
themselves unable 10 take II after all But
he bull clique, Notwithstanding their
Xcessive avarice, are presumed TO have
better off than their victims.
The tightBess Of the money market
Ihich resulted from this crash In gold
as followed by the panic in stocks. Men
nd firms were compelled to realize mo-
ey on railway shares, which, when
'rced heavily upon the market, suffered.
he fictitious values of many of them
urst at once, and the real value of others
III under suspicion, or were sacrificed
'om necessity.
The nominal depreciation Of railway
oSres alone is estimated to be not less
nan two hundred millions.
The stock panic, far more than the gold
anic, affects business men and the rural !
anks throughout the country. In cities
lch as Buffalo and Cleveland, and in the
ties throughout the West, merchants
nd banks have lost heavily-even disas-
'Ously. The banks here and in Philadel-
hia are not, 1t is believed, cramped as yet
y the downfall of stocks and the great
rms dealing in them. It Is the custom
T New York banks to protect themselves
Y the retention of heavy margin loans on
iilway shares-margins which have con-
antly to be kept good, as such shares de-
inc. 1t is the keeping good these mar
ms which drains the resources of deal
-s; and whenever a house to which the
'an is granted fails TO keep good its mar
IN the bank has the privilege of selling
he collaterals forthwith for its own pro-
'ction. The price which the securities
lus bring, together with the margins al
,ady in the'bank's possession, will gen
ally make good, or nearly good, the risk
hich the bank has taken.
Still, there is yet room for doubt as to
hat may befall.
So much for the World. On the lst OF
ctober the amount Of coinin the Treasury
the United States was Sl0s, 80, ,658 81.
Il the New York city banks together
ad, by their last reports, less than four
en- millions.
In May Mr.. Boutwell, announced that
ON that time forward the Treasury
ould be perfectly unapproachable by
~ outside speculations; that if currency
Id gold were plenty in the vaults, 1t
ould sell gold and buy bonds; and that
no possible way would it interfere with