The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1896-04-20
Salt Lake City, April Is, 1896

Salt Lake City, April 49, 1896.
Editor Mining Department, Herald
After making due allowance for the
rise and fall in prices of stock there still
remains some peculiarities in regard to
these fluctuations that the novice cannot
understand. For instance, how is it that
according to the quotations. occasionally
more is offered for stock than what is
asked for it, and why is stock offered for
sale when there is really none to dispose
OF. and in the event of a purchase, the
broker is obliged to borrow the stock to
complete the contraG?
Again, how is it that when, we will say,
u is asked and so cepts bid for stock one
day, the next day only 80 cents is asked?
Where is the purchaser who the day prev
1ous was willing to give 80 cents, and
what is the explanation of it, being offer
ca at 30 cents when a few hours before
they demanded 81?
Certainly nothing, in the meantime has
developee that could be construed as I'M
favorable to the mine or that would JUS
tlfy this depreciation. AS matter of
TACT in the case l allude to, the reverse
is true, and the stock was actually worth
more when quoted at 30 cents than the
DAY before when 90 cents was bid. L think
this can be proven.
Now l only seek information, and these
questions are not propounded because
mink you cannot answer them, but be-
cause l believe you can. 1 could give
other instances of what appears to be
quitting 1t mildly inconsistence in the
way business is carried Oh in the ex-
change, and in consequence many, like
myself, who do not claim to know the
ropes" but who read and consider the
transactions as recorded in the papers
from an independent standpoint, begin to
lose faith and even patience in a con-
Germ that claims to be one thing but
whose peculiar methods of business
seems TO justify the outsider in suspect
ing it is something else.
Respectfully, cts, s. Y.N.
S. Y. N. has certainly -propounded
some questions that we cannot answer
and in some instances we believe if
would require an X-ray to penetrate
into and through some of the problems
he has propounded. There is, we are
sorry to say, a great deal of "horse
play" enacted on the floor of the
mining and stock exchange, which
condition of affairs has been criticized
several times in these columns.
In answer to the first quotation we
will state that in our table Of quota
tons the lowest offering is often given
as being even lower than the highest
price bid. The reason for this is sim
pie, although it rarely occurs, except
ing in the case of sale. Surprising,
for instance, at the opening, Nam
moth sells for So; later on it sells for
$2.95. In giving the quotation we
would say that the highest bid was
SO, lowest asked $2.95, which would be
correct.
Why a broker should offer stock
when he has none to sell, is a question
that no one but the broker himself
can correctly answer. It may be that
he is trying to make a quotation for
the stock: and if, in doing so, his offer
is taken, he is obliged to buy or borrow
to fill the order; and, failing in this
beg off or forfeit his membership in
the exchange. 1t is highly probable
also that some of the brokers do this
in order to appear smart. but a few
severe lessons, or few losses, will
undoubtedly tone them down to le-
Ultimate business.
In regard 10 fluctuations in quota
tions as mentioned by S. Y. N, we
agree with him chat in some instances
there is certainly nothing to justify
them. If 81 is asked for certain
stock one day and so cents bid, and
then the same stock is offered the
next day at 80 cents, it can safely be
put down that the brokers are not
acting in good faith, and they should
be ruled off the floor and it is safe to
say that such stock has very little if
any intrinsic value. Yet. If what our
correspondent says is true, that 1.-The
EIOCh. was actually WDIlI LlOEG When
quoted at 80 cents asked chan the day
before when so cents was bid it
would seem strange that some of the
brokers On the floor did not take it in.
Still it might have been that the
broker making the offer was bearing
the stock and was willing, if necessary,
to suffer a loss in order to carry his
point. Suppose, for instance, in order
to bear the stock he should lose some
money. Yet if he should hammer 1t
down to a low figure and demoralize
the market he and his friends might
buy heavily, and when the stock re-
covered, as it would be bound to do, he
would make dollars where he had lost
cents. For some good reason known
to himself a broker might bull stocks
in order TO break it; for if not based
on justifable grounds such stocks
would collapse and drop to Che point
where the broker was DESTROYS that
it should be.
CT course, those who are not "orto
the ropes" cannot understand or see
into these manipulations, especially
when it affects speculative stocks. for
1t is by the fluctuations of these stocks
largely that the brokerage business is
maintained. In investment stocks the
bearing or bulling of the market is
harder to handle, as was evidenced
last week when several brokers at
tempted 10 break MeEcuT. 1ney sue
ceeded partially in doing this, but lost
heavily in not being able to fully carry
out their plans. 1t was believed by
them. on account of the report that
Mercur would skip a dividend, that the
stock could be beared to Sc. Acting on
this belief, they offered to sell below its
actual selling price, which was then
really less than its actual worth. See
ing that the stock was depreciating.
holders became frightened, and began
70 sell, thereby unconsciously helping
to carry on the scheme. The stock fell
heavily and sold as low as $630 and
1928 Then, Unexpectedly, a reaction
took place and the stock advanced
rapidly to $6.75, $e.S5 and 81. Some of
.iae brokers who sold at $3.50 and $6.25
actually sold short, and had to buy
at $6.75 and $685. in order to get stocks
TO fill the snles they had made, and
thereby they lost quite heavily If it /
were not that people became fright
ened SO easily, the bearing of invest
ment stocks would be next to an i'm