Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1886-05-11
What q Corner" Is.

A stock corner is thus explained by tht
New York Ercning Post: The "bear" ele
mcnt in the market consists of all those who
| think that prices of securities are higher
than they ought to be, higher than they car
permanently remain. In order to take ad
vantage of the unwarranted "infation ofval
ues," as they understand it, they borrow
stocks and sell them at the high prices pre-
vailing, expecting to be able to buy them in
at lower price before it becomes necessary
to return the borrowed securities. For in
stance. y borrows from B 1000 shares oi
Hannibal aud ST. Joseph, which is selling al
CO. 4 pays B $50, 600 cash aud agrees TO re-
turn the stock on dcmaud, when, of course,
the money will Dc refunded TO him. 1t is
for BIS interest to lend the stock, because he
gets The interest on the 100000 during the
interval, or. at all events, more interest than
ne would otherwise have to pay for the use
of the money Under ordinary conditions
B, the lender of The stock, will pay A, the
borrower, something for the use of the mon.
cv, nut i! the particular stock wanted by the
bears i scarce il will be lent "ilat )" that is,
the Borrower will receive nothing for the use
oi the money while the loan continues. In
eXtreme cases the lender may even get q
commission for the use Of the stock in addi.
tion to the iners st on the money which it
represents. little market tluctuates while
ne loan continues The borrower and lender
~tt.e with each other at the close OF each
day, - mat the amount CT money shall at
all times be exactly equivalent to the value
of the stock.
When the bears, or any portion of them
have discerncd weak spot in the market
that is, Il security selling for more than it
is worth in their opinion-they borrow and
sell literally. Their selling has the same
effect in putting down the price as though
the stock were absolutely their own, and
their expectation is that other holders OBJ
serving the decline in the price will become
alarmed and sell also, thus putting down
tho price still more and frightening still 9TH
er holders They intend, of course, to buy
enough at the lower scale Of quotations to
deliver back what they have borrowed
poc'leting the difference. 1t sometimes,
though rarely, happens that few persons,
discoverin" what the bears are about, and
believing that they (the bears) are strong
enough 10 stand heavy loss without break
ing, quietly buy up all of q particular stock
| that exists. In order that the pIice may
not be forced up while they are themselves
buying, they lend stock 10 the bears, and
thus encourage the latter TO sell. When
they have secured all, or nearly al | of the par.
ticular stock that exists they call in their
loans. The bears are then compelled to
buy, and since 10 sLcck, or very little, is
| for sale, the price can he forced up to any
figure at which the corneriug party choose
to put it. That is what once happened in
Hannibal and ST Joseph The ;tshorts
must come up and settle on such terms as
may he dictated to them. The last resort is
to leave the cornering party saddled with
| the whole issue of the stock in question
Whether they nay make or lose by the
operation. will depend upon whether they
can extort from the bears more than enough
to compensate them for the loss they may
incur in re selling the stock to the general
public Most commonly the cornering
party, as well as the cornered, lose money
which has been gained meanwhile by the
multitude, who have taken advantage o.
the high prices to sell out