Savannah morning news. [volume] (Savannah) 1868-1887, 1881-03-04
The Panic in the Eastern Stock
Market.
Hartford Times


Hartford Times.
On Friday last the fall in stocks was
so great and rapid that the brokers could
not keep track of their margins, and
they declined to take new ones. If any
one desired to purchase any stock, he
was required 10 pay for it in full, cash
down. A margin" is percentage,
usually 10 per cent, of cash paid down
on the amount of stocks purchased. Ten
thousand dollars buys 500, 700 of the
stock, the broker carrying the stock for
the buyer, so long as its price holds up.
But If the stock falls 5 per cent, the
broker demands more margin. If it
falls 10 per cent, the broker sells the
stock, and saves, if possible, his COM
mission and himself from loss. But
if the stock rises 10 per cent. the
purchaser makes $40, 900, less brokers
commission Cd, on his venture. II the
price advances 1 per cent. the purchaser
makes 81 600, or ne loses 81, 900
if it falls / per cent. The COM
mission of for buying or selling is
1874 cents on each hundred dollars.
When stocks fell suddenly 10 per cent.
on Friday, margins of $4,000 on $780,
600 of stocks were at once swept away
from the purchaser. BY putting up
margins the purchasers can handle ten
times the amount of stocks that they can
command by a complete purchase.
Hence the temptation to gamble on mar
gins is very creator it is simply gam
bling. When stocks are rising ''all
along the list" the margin operators
make money rapidly. The rise of per
cent. on the stock gives to the margin
investor 10 per cent. on the amount of
his margin.
1t is mill that grinds rapidly, and it
Is as likely to grind one way as another.
The heavy capitalists, like the Wander
bilts, Stewards and Astors, never put up
margins. They inquire into the sound
ness of the stocks-the amount of in
debtedness of the companies, their earn
ings and expenditures, and they always
have an eye to dividend paying stocks,
or to those where the companies are
paying of Indebtedness, increasing their
receipts, and travelling along surely to
dividend paying positions. Of these
they purchase heavily, pay cash down.
lock up the stocks or bonds, and snap
their fingers at panics Or, if this class
of capitalists ever speculate, they
make up syndicate of men as rich as
Vanderbilt, Gould and Sage, and
throw upon the market large blocks of
stocks, crushing down prices, buying at
low prices of each other; then, when
prices get low enough, they purchase all
that is offered, and at once put The
prices up. In ''bulling" the market,
which is to toss 1t up, they begin by
purchasing stock to be delivered in
three, five or ten days. In this time
they purchase all that is offered at adj
vanced prices, and the brokers are
settlements. The lambs are out.
siders, who know nothing of
the operations or intentions of the
syndicates, but who put about all they
are worth on margins, and they are
''sheared" by the inside or knowing ones.
A case of shearing was that of a sport
ing man in New York, on Friday, who
had $40, 900 up on margins. At noon on
that day he found it was all sunk. He
put up $25, 000smore to save his stocks
In three hours time that amount was also
swept off, and he was sheared close down
to the skin. A woman of means and
pluck. who had $4,000 on margins,
finding it was lost, stepped up squarely
with $87, 900 more, and purchased out
right all the stocks, amounting to $780,
600, on which she had been gambling.
With compressed lips ard toss of the
head she quickly retired, leaving the
bulls and bears to fight it out on their
own account