The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1904-07-03


This is not true. Under legitimate
methods as practiced by ST. Paul,s
leading brokerage houses, actual COM
modities are dealt IN, be they stock or
grain. and when customer of one of
the houses mentioned places an or
DER" the house fills that order for
him as he gives it. at the time making
preparations to deliver the commodity
dealt in at the time of the eonsumna-
ton of.-the deal, or as it is called.
trade
As clear an explanation of sspecusaE
ton" in eontra-distinction to gam
bling as may be had, comes from Mr..
NJ. Doran, senior member OF st. Paui,s
oldest brokerage house, Mr. Doran
says:
@The patrons of legitimate broker
age house affect supply and demand
Just as any buyer and seller do. For
instance, il the market is SO giutted
with wheat this month that the price
is very low and you. believing that it
VIII be scarce month or two hence
buy up the present over supply. and
hold it for the demand. YOU have
speculated. More than that. YOU have
kept the price of wheat from dropping
lower today, and, if you are a wise
Specuiator, you will prevent the price
from going too high two months hence.
GU wish TO make such deal in
wheat. Instead of hunting up the
commodity yourself you go to a broker
age house whose business it is tn keen
in touch with all the great markets of
the world-to be the meeting place of
buyer and seller, charging commits
sion for the service of exchange. But
suppose you wish to make this deal. VET
have not the capital to purchase the
wheat-say 1G.000-and hold it until
such time as you anticipate the in
crease in demand Say wheat is SELL
ing at so cents; you think it will he
scarce enough to bring 80 cents next
month. You deposit with YOUR broker
10 cents for every busileI of wheat
you wish TO buy, or S1,06O-that is the
margin of difference between what that
amount of wheat is worth today and
what you anticipate the demand will
bring for II a month hence Now. If
you are dealing with a legitimate bro
kerage house 10000 bushels are really
held from the market, for the broker
protected from loss by your marginal
money-with his own capital and credit
secures an option on that amount OF
wheat and stands ready to deliver il
upon your demand. If you have gaug-
ed the market correctly your one thou
sand comes back, plus the thousand
made by the rise in price of wheat.
minus, of course, the commission TO-
brokers' services. Sometimes It han
pens that man, instead of selling his
optlon at the end Of the month, thus
putting the wheat on the market again
pays the balance and demands f5eIiv'
cry This seldom occurs, for a man has
little reason 10 draw wheat entirely oiIt
or the current of trade. The business
OF speculation is TO regulate. not TO
stop commercial currents. This can he
done as Wen on margins as on complete
puI is, providing they are
real margins The difficulty is that the
margin Is often but bet because the
se-eaiied brokerage house is NOT a
brokerage house at all It is only a bet
shop. since the SPECTATORS money does
not mold an option in wheat or any
thing else. and therefore does not in
the least affect supply and demand. OF
course, this is nothing but gambling
10 De legitimate, margins must carry
options
Mr.. Doran's distinction between
speculation and gambling is. it apnears
very concise and distinct
Also his explanation OF the method
or carrying out a trade on margin ia
clear and concise.
Each OF the brokerage offices in ST.
Paul. are connected by direct private
telegraph Wire with the Eastern mar
ket points at which the trades are to be
= pun the receipt Oh an order
from St. Paul client, the local bro
ker selegraphs his agent at the market
point to buy" or '1self' so MANY thou-
sand bushels Of wheat or shares of
STOCK as the case may be- The order
IS sent. to the trading floor, where
agents OF the correspondent effect the
trade, rePffting by wire to the st. Paul
broker, no in turn, informs his cltent
or the completion Of the deal.
The closing of deal is handled in
IKE manner, save that in some trans
actions where the investor Is not in
touch at all times with the broker. and
where he has indicated his intention
10 invest only limited amount of can
ltal as margins" In such cases when
the market arrives at the figure beyond
winch II would require more margins
to carry the trade. the deal is closed
on the brokers' order.
St Paul is represented in the broker
age business by a number of firms.
among whom may be mentioned M.
Deran & Co., with offices on the ground
moor of the Germania Life building:
oConnor & Van Bergen. on the sec
ond floor OF the same building; III. HoI
pert q Sons, ground floor of the Ma
tlonal German American bank build
ing; A. j. Cummings, Dispatch build
ing, and James Doran & Co.. ground
noor of the National German Ameri-
can bank building. All the firms men
toned are accredited to the Eastern
exchanges.