New Ulm weekly review. [volume] (New Ulm, Minn.) 1878-1892, 1881-04-20


deposit with the broker eight or ten per
cent: OF the par value of the stock.
Dealings in the New York EXCHANGE fare
80 scaled that ten per cent means 81, 900,
and most brokers require this sum from
strangers. This deposit is called the
margin. The broker then opens an ac-
count with him by placing 81, 900 to the
credit of the customer. The next step
is for the customer to select stock which
is likely to advance, and having made
up his mind that Erie, for instance, is
the card, he simply says to the broker,
,"Buy me 100 shares of Erie" OFF goes
the broker like q shot to the Stock
Exchange, where he dives into crowd
of 1000 other brokers. The floor of the
great room has upon it a score or moro
of knots of men, pushing, surging, and
yelling at the top of their lungs. One
knot is the St. Paul clique, another the
Reading clique, q third the Erie crowd.
Our broker rushes into the Erie coterie,
elbows men out of the way, holds his
right hand high in air and, knowing
that the one man about whom the
crowd is surging has some Erie stock to
sell and hearing q dozen other men
with their hands in the air yelling
''39 49," he jumps up in the air higher
than all the others and yells ss4O.'
Thereupon the center of the group
makes q rush at him and shouts ssSold."
All this means that our broker has
offered to pay $40 share for 100 shares
of Erie, and the other man has sold it to
him, the other brokers having bid only
$39.87 IL for it. The two brokers lot
down the transaction in their memoran-
dunn books, and the broker who sold it
reports the sale. Instantly is flashed
over the wire and into every brokers'
office in the city the new quotation for
Erie of 40. The broker who sold rolls
up 100 share certificates of Erie and
sends them to our broker, who puts
them in his safe and sends back check
for $4,000, the price of the stock.
Our new customer then "holds 100
Erie" He may "hold" it as long as
he pleases, so long as the price of Erie
advances. IF Erie is in demand, the
price will advance. When it is quoted
at Al it has advanced 81 q share, and
our friend is 800 ahead in the transac-
tion-that is, he would be were it not for
the brokers' commission, which is 1-8
per cent. for buying and 1-8 for selling,
a total of IA for both buying and sell
ing, which to our friend would be 1925:
hence the net profit at Al would be S75.
At 45 it would be $475. If the stock is
held longer than the day of the pur-
chase, the customer must pay interest
on the $4,000, the cost of the stock, at 6
per cent. When the customer decides
that he has made sufficient profit from
the transaction he simply says, "Sell
my 100 shares of Erie, and the broker
sells it. If the sale is at As, the Gus
toner is credited with the profit, less
commission and interest. He then has
1,4OO and some odd dollars, which
stands for margin in his next transac-
ton; or he may withdraw all his money
and close the account. After two or
three such operations his capital has
doubled, and then, instead of 100 shares,
he may purchase POO. Many a beginner
has increased his original capital of
81 1000 to $2O, 900, and even $50, 900, and
then, becoming less cautious in his
operations, has found himself with 900
shares OF stock on hand when there came
a crash, and lost all. Stocks 20 down
so much easier than they advance that
the profits of twelvemonth may be
wiped out in twelve hours.
The beginner invariably operates fcx
q rise. He can understand that paying
40 for Erie and selling it for IS means
$500 profit, less commissions. But
selling stock to buy it again at q lower
figure and deliver to the person to whom
he sold confuses him. Nevertheless, it
is a saying of Wall Street that more
money is made on the short than the
long side of the market, and shrewd
operators work the market both WAYS.
The fifty men who come and 90 in
our brokers' Office represent almost as
them, probably, are professional spec
ulatcrs. The others are lawyers, insur.
ance men, clerks, statesmen, etc. One
Is practicing physician, and there are
two or three officials under the city Gov
ernment and an officer from one of the
harbor military POSTAL intent on
making an honest dollar outside their
regular vocation. Generally it ends in
disaster to them. Sometimes this disas-
ter tempts to peculation, and moral as
well as pecuniary ruin results. Some of
them never buy more than 100 shares of
stock at time, and others never less
than 1000. The great majority of Wall
Street operators trade in from 200 to
400 shares. Opinions differ as to wheth-
Or prices will advance or recede, and
frequently one will be buyinga stock for
an advance while another is selling
against decline. Standing over the
same telegraph indicator may be one
man who hopes that Erie will 20 up and
another who hopes it will 20 down.
Some men are lucky, always making
profitable turns, and others are always
losing. All are intensely fascinated
with the fuctuat ons.- Boston Herald.