New-York tribune., 1920-01-12
From the Ledger of
Wall Streets Mistakes
'hcldents IN the Days Business of Stock Exchange
rarms en Which Cause, in the Aggregate Losses
OIL mot Less Than $4,000, 900 a Year

"A 1nt0
Stock Exchange house not long
ago and gave an order to buy 1000
shares OF American Locomotive. Time
), az the lawyers say. "of the essence"
n tne execution of stock market or
aers, and in the haste of putting this
ne through some one made m;staLa
ne representative of the firm on the
soor OF the exchange, instead of buyinp
:. thousand Loco" bought thousand
Baldwin Locomotive. -
Now, the stock of the Baldwin Loco
motive Works moves quite as swiftly
times as one of it's products does
men coupled to an express train. Bv
ne time the brokerage house detected
ne wrong execution of Mr.. Badwin's
rder Baldwin Locomotive had Travelled
Up 7H points. Following it's custom
men an error in execution is discov-
red, the firm Immediately sold out the
ahousand shares at profit of $500
md went into the market for American
locomotive, which meantime had risen
q points. The brokers had to take a
oss of 81 500 on the latter stock, which
Welded the customer that much profit.
At is seldom that the mistakes ac-
count" is credited with so nice a turn.
over $S.OOO,OOO
For. Mistakes
A cynical student of human affairs
once remarked that the story Of civili-
cation is simply comedy of errors.
because wall Street is human insti-
autlon-a fact which many outsiders
an to grasp-it makes many mistakes.
Wall Streets mistakes in judgment and
n m, hoy of%
It's critics, but few outside the inner
circle have ever examined Wall Streets
mistakes in execution, the mechanical
errors of the Street. And yet the lat
ter are costly. indeed. The aggregate
cost to the 500 or more active Stock
Exchange firms exceeds $4,000 900 a
year. If this estimate is somewhat
way. from the exact figure, it errs
through understatement rather than
| exaggeration. The total would be very
much larger if occasionally mistakes,
like the experience Of Mr.. Baldwin,
were not profitable to brokers, instead
the debts far exceed the credits in the
mistakes account" which every Stock
Exchange firm keeps.
1T the time is ever reached when
automatic machinery will be able to
do limited amount of creative think
ing, as some engineers predict, the
financial district will be nearer an
error-proof condition. The prevalence
of human beings at every step in the
process of transmitting orders to buy
and sell stock and executing them ac-
counts for the frequency Of slip-ups.
The familiar epigram that "to err is
human" is truer nowhere than down in
Wall Street.
Tho human mind, psychologists tell US,
is an extremely complicated mechanism,
and members Of Wall Street firms who
foot the bills confirm the conclusion.
If all the clerks and other links in the
machinery of speculation had "one-
track" minds of striking simplicity they
would not write "buy" when they mean
SELL" and vice versa, as they now do
every so often, when their thoughts be-
gin to wander from the business at
hand to the high cost of living, the
growing independence of women, the
increasing boldness of communists and
the rest of the stuff out of which con-
vcrsation is made. .alts. s ......
r. y-Proke1s and their clerks, con the
average. make nine errors for every one
the customers make. That is because
the customer touches the speculative
process only at the beginning and the
end, in giving the order and receiving
a report on its execution, whereas the
broker and his encourage in cases of
telegraphed orders participate in about
ten steps: ..t.~- .
When buyer of stocks calls up on
the telephone and instructs his broker
to buy 100 shares Of Steel, the order
is often confused with one to sell. To
avoid misunderstanding, customers
speaking over the telephone are asked
to give their order in this form: "Buy
ION C+aol R,,1,U