Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1905-12-24
BUCKET SHOPS IN ACTION
How the Business Nowadays is Conducted
and Financed
IMMENSE SUM CONTROLLED BY BROKERS
Look Into Typical Clearing
House ON wall street where
Orders Are Received and
Bucketted.

II Is habit Of the respectable business
folk OF Wall street. when the bucket shop
evil happens TO become a topic of CONVEX
sation. to speak Of II in a very distant man
ner and on hearsay only. Their attitude
toward IL is like the attitude of respectable
members of society toward the social evil
1t lie a subject on which one must not APP
pear to be too we'll Informed. The head Of
a conservative commission house Is horri-
fed to hear that the bucket shop business
centering in New York from outside points
is frequently as large as the total transac-
tons reported on the New York Stock ex-
change. Between tho under world of
finance and the better elements Of Wall
street there is as great a gulf as between
the corresponding divisions Of the social
world, and whatever one in the upper divi-
sion may happen to know of the lower divi-
sion he had better keep to himself
1t has always been so, but in the last
three or four years the bucket shop bust
ness has become so well organized that Il
has Its direct influence even on the New
YORK stock exchange, and the fact Is be-
ginning to be recognized. At least 20 per
cent of the business is backed by a few
men commanding an immense amount of
capital Instead of there being Thousand
Of bucket shops all over the country. each
backed by an individual OF limited re-
sources, as in the old days, there are now
several bucket shop systems maintaining
headquarters in New York, Boston. Chicago
and Philadelphia, whose function is to back
the sheets of the offices outside where the
business originates. The business of sew
eral hundred offices is cleared or banked"
oy one system. The manager of an outside
office gets either a salary or a percentage
he
the system takes all the risk and all the
profit.
Bucket shop Clearing House
The clearing house of a bucket sbon s,-a-
TEN is its headquarters The inside NJ
such a place is we'll worth seeing. It's
principal feature is a telegraph room.
manned by force of expert operators
VINO receive the orders from the outside
| ofices. These orders go to the man who
passes upon them. Before him he has a
| Dig sheet on one side of which are entered
the sales and on the other side the mr.
chases. He has also the current market
quotations, and these generally are two
or three minutes ahead of the quotations
on winch the people several hundred miles
away are trading. Suppose trader in
'he providence office wants to buy fifty
shares Of the sugar at the market. the on
a
passes 1t on to the man who fills II. Then
a report Is made: bot 80 Sugar. 40"
! Ihat is for the client. The bucket shop
| is at once short of fifty shares of sugar
theoretically, and the trade is entered IN
| on the selling side of the sheet MS a sale
OF that amount of the stock al no There
is no actual transaction, of course
| occasionally an order is received to buy
| pr sell an inactive stock that may be sub
| poet to abrupt movements either way
| occasionally, too, the bucket shop people
| suspect that they are getting wise or
ders," which means that Wall street ma
nipulators have been sending out ennis
sarles to get the bucket shops long of
something that 1t is going to have a break
! OF snort or something that is going to be
put up such strategems are sometimes
practiced on a large SCALE and the bucket
shops, II they are unsuspectng, lose heav-
| lily. Orders that fall under this sus-
picion are filled, because the bucket shop
TO do business satisfactorily, must stand
! prepared to buy or sell anything that, peo-
! pie may want to trade in, but after the
| orders nave been filled they are put under
cover which is to say that the bucket
shop people themselves so into the market
| and hedge against their risk by buyinp
what they have sold or selling what thew
have bought In that way they protect
| themselves against loss
The headquarters plant of the bucket
shop system is generally located in some
! lnconspicuous place. There are several
! hidden away in the large Office buildings
OF Wall street without any legends what
! ever on the doors and nothing to show
the character OF the business going on
] within. An unknown visitor is not per-
! United to penetrate further than the first
small office OF the suite His further prog
ress is effectually barred
Capital Available.
| 1t is to be remembered that the hackers
| or these systems command immense can
| ital. They find, for example, that on their
sheets they are short $4,000 shares of Sugar
at an average price OF 40. having sold that
much TO clients, and that the average
margin on the $1,000 shares is less trans
per cent, as 1t probably would be- flr
! bucket shop trades a general thing are
| lightly margined. A break OF Ave points
! in the price OF the stock. therefore would
! wipe out the Sugar account and sweep the
| customers margins into the bucket shop
| treasury. There is then nothing TO pre-
vent the hackers OF the system from seiz-
ing psychological moment TO go into the
stock market and raid Sugar. They can
well afford TO lose $50, 900 on that operation
! IL the average margin on the 5000 shares
| that they are short of on the sheet Is 2
! per cent or 100000. No Stock exchange
| broker is permitted by the rules to transact
! business for a bucket shop. but he may
accept business rendered to him by bucket
shop hackers individuals. He may be
unaware that the client who wants to
make a turn on the short side OF Sugar is
| I'm the bucket shop business. II doesn't
matter whether ne is or not. He deals
with the individual and not with the bucket
shop. One Of the largest bucket shop or
CARNATIONS in the west is generally sup
posed TO be represented on the floor OF the
Stock exchange by a member who executes
heavy commissions at times for its prin-
cipal hacker and his associates. They deal
with this broker individuals, and II is
not for him to distinguish between their
personal speculations and such OF their
operations as relate 20 the state of their
bucket shop sheets" Several months ago
the operations OF this clique became so
prominent as to be openly commented
upon, but there was nothing illegal about
them far the Stock exchange was
concerned. The stock market Is public
affair, and it is anybody's privilege to buy
or sell stocks. In selling the market pre-
sumably TO break prices, this crowd got
heavily short Of certain stocks, and is sup
posed TO have taken a big loss on it's line
| Of oh