The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1899-10-16
PURCHASE OF STOCKS
CAREFUL DESCRIPTION OF HOW
TRANSACTIONS ON MARGINS
ARE CONDUCTED
HOW THE STOCKS ARE BOUGHT

HOW THE STOCKS ARE BOUGHT
And Every Process of Speculation
on the New York stock Exchange
Explained - Most of the People
Who Deal Generally Know Very
Little of the Vast System Employ
ed of Securing Shares They Want.
Wall street and the stock exchange and
tho machinery of transactions in stocks
and bonds are matters entirely unappre-
ciated and not at all understood by. the
great majority of people-eVen by bust
ness men. The average man doesn't re-
alize his own ignorance of Wall street
He will admit that sterling exchange and
the market for it are mysteries to him,
and, if he is frank, he may own to only
a cursory understanding of banking. But
when it comes to a question of how
stocks are bought and sold, he will tell
you that they are traded in like all other
commodities, without any idea that the
security market machinery is the most
complex that can be conceived of, says
the New York Herald
SPECTATORS DON'T KNOW.
Even the man who speculates in securi-
ties usually is ignorant of the intricacies
of the system that he uses every time ne
gives his broker an order to buy a hun
dred shares Of stock He has an idea
that, receiving the order, the broker sal
lies out upon the floor of the stock ex-
change and, meeting some one who wants
to sell that particular stock in like
amount, buys. He thinks that this very
stock is subsequently brought into the
brokers' office and then paid for, and
that 1t is kept in the brokers' strong box,
or used as collateral for loan, or in
some way held within easy reach until
an order is given to sell, when it is taken
out and sold on the floor of the exchange
like so much meat or dress goods in
Hester street bazaar.
This is the popular notion, and were it
correct one the lot of Wall street broker
would be an easy one indeed. AS a mat
ter of fact, this is only the theoretical
method of stock trading. The practice is
very different. The method in all it's
complexity, is hard to explain and can
probably be most easily understood by
following the course of an imaginary
transaction.
A LAMB GOES TO WALL STREET
A speculator-let us name him Lamb
feels sure that ST. Paul stock, for in
stance, is going up in price and he wants
to profit by the advance, consequently he
goes down into Wall street by which is
meant the banking center, and not
necessarily the little street of that name,
and into the office Of a broker whom he
knows, by the name of, say, Sharp, of
the firm of Sharp &, Quick He tells
Sharp that he wants to buy one hundred
shares of st. Paul-one hundred shares,
by the way, is the unit of Stock Exchange
business, and practically all transactions
are on blocks of that size or muItiples
thereof. st. Paul at this particular time
is selling at 130-at 40 per cent of its
par value of 500 per share Or $130 per
share. Thus, the one hundred shares
would cost $4,000
Sharp. the broker, will require Lamb,
the customer, TO put up a margin of
ten points" which means, point being
l per cent, or dollar, that Lamb has to
give his check for $1,000 as a margin for
the transaction, while Sharp loans him
$4,000. This margin Is the brokers' pro-
lection, and allows Lamb to have his
ST. Paul carried until it gets down ten
points below the purchasing price, or to
120 Therefore, he deposits $1,000 so that
he may get long Of St Paul at 100,
and stay long" of it unless it breaks to
100
THE ORDER TO BUY GIVEN.
Having made this arrangement for mar
gin, Lamb fills in a blank buying order,
authorizing the purchase of the stock for
his account and the order is handed to
ShaTp's order clerk, who ali day long sits
by the board phone" giving orders, re-
ceiving reports and keeping sheet
that shows what has been done and what
client it has been done for.
The BOARD phone is a private tee-
phone wire running direct from Sharp's
office 10 the floor of the stock exchange.
If you will go up into the gallery OF the
exchange any day you will see at both
the north and south ends Of the New
street wing Of the building long rows Of
telephone booths Each phone is attend
ed by a clerk, who stands with the re-
ceiver clasped about his head, and every
now AND then scribbles something on a
bit of paper, which is speedily grabbed
by q gray-coated stock exchange page
or by a nerv0usly quick broker who is
standing by and rushed out into the maze
OF the throng on the floor. One of these
phones belongs to Sharp, and the boy
standing in front q it is another of his
clerks
THE ORDER ON THE EXCHANGE.
Over this phone and into the ear of
this clerk comes Lambs order trans
formed into Buy a hundred Paul at thir-
ty% It means st. Paul, and the price IS
1870 but SuperfluouS words are not used
south of Pine street between 1G and 5
o'clock. The clerk scribbles down the
order on slip of paper, condensing it
again into by 100 St. P. at 100" and
thrusts this paper into the hand CT
Sharp's partner, Quick, who, being the
board member of the firm Of Sharp &
Quick, spends all of his time on the floor
of the stock exchange executing the or
ders that are sent over from the office,
where Sharp holds sway.
HOW THE STOCK IS BOUGHT.
Quick grabs the order, reads it with
fasty but sure glance, and darts across
the room to the st Paul crowd" where
the stool. is dealt in. Every stock nSted
on the exchange has assigned to 1t
particular section of the door; others are
merely marked out on printed plans. Ell
bcwing his way into this ST Paul market
Quick asks:
whats the last Paul?'
Thirty and an eighth" is the ca e,
lessly given answer from a gentleman en-
gagged in the pleasing pas inc of tear
ing paper up into small bits and p k
ling them over the heads of the crowd.
Quick wants to know the market for
St Paul.
"How's it offered?" he asks.
Ell huner' at n eight! says an ex-
cited person, grabbing him by the
shoulder
What's bid?" asks Quick, seeing thai