Shenandoah herald. [volume] (Woodstock, Va.) 1865-1974, 1886-07-02
WHAT A CORNER" is.

A stock corner is thus explained
bv the New York EreRiag Post ;
The "beaIn element in the market
consists Of all those who think
tina. pnces, Of securities are higher
than they ought to be, higher than
they can permanently remain. In
order to take advantage Of the
unwarianted "inhation Of values,
as they understand it, they borrow
stocks and sell them at the high
prices prevailing, expecting TO
buy them i'm at a lower price before
it becomes necessary to return the
borrowed securities. For instance,
4 borrows from b 1000 shares OF
Hannibal and st. Joseph, which Is
selling at CO.. A pays b 1000
cash and agrees to return the stock
on demand, when, OF course, the
money will be refunded to him. 1t
is for BIS interest to lend the stock,
because he gets the interest on the
500, 900 during the interval, or, at
all events, more interest than he
would otherwise have to pay for
the use of the money. Under ordl-
nary conditions, Il, the lender OF
the stock, will pay 4, the borrower,
something for use of the money, but
if the particular stock wanted by
the bears is scarce it will be lent
"aat > that is, the borrower will
receive nothing for the use OF the
money while the loan continues. In
extreme cases the lender may even
get a commission for the use of the
stock in addition to the interest on
the money which it represents. If
the market huctuates while the
loan continues, the borrower and
lender settle with each other at the
close OF each day, so that the
amount of money shall at all times
be exactly equivalent to the value
of the stock.
When the bears, or any portion
of them have discerned weak
SPOT in the market that is, secu-
rity 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 eX-
notation is that other holders
observing the decline in the price
will become alarmed and sell also,
thus putting down the price still
more and frightening still other
holders. They intend, Of course,
to buy enough at the lower scale Of
quotations to deliver back what
they have borrowed, pocketing the
difference. 1t sometimes, though
rarely, happens that few persons,
discovering what the bears are
about, and believing that they the
bears are strong enough to stand a
heavy loss without breaking, quiet
ly buy up all of particular stock
that exists. In order that the price
may not be forced up while they
are themselves buying, they lend
stock to the bears, and thus en-
courage the latter to sell. When
they have secured all, or nearly all,
Of the particular stock that exists
they call in their loans. The bears
are then compelled to buy, and
since no stock, or very little, is for
sale, the price can be forced mp to
any figure at which the cornering
party choose to put it. That IS.
what once happened in Hannibal
and st. Joseph. The "shorts0
must come up and settle on such
terms as may be dictated to them.
The last resort is to leave the cor.
nering party saddled with the whole
issue Of the stock in question:
Whether they may make or lose
by the operation, will depend upon
they can eXtOrt from the
bears more than enough TO CON-
pensate them for the loss they may
incur in reselling 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 advant-
age of the high prices to sell out.