Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1922-01-31
BUCKET SHOP sVlNDLERs 1
Leaks In Financial System PrdC'
tiCed by Americans
MANY BROKERAGE HOUSES FAIL
Brokerage Business Honestly Conduct
ed Is Good as Any Business-many
of Them Not Honestly Conducted.
nv Richard Spillane.)

(By Richard Splllane.)
There is a story told illustrative Of
the carelessness Of the Mexican peon.
He and his family were budding in
their shack during a storm Rain was
pouring through many leaks in the
roof
"Why DON'T you mend your roof"
tho peon was asked.
cant now; raining too hard" he
answered.
"But why didn't you mend it before
the rainy season."
mo use then; it wasn't raining" he
replied. 'iSig
What essential difference is there be-
tween the attitude Of the Mexican peon
toward the leaks IN his roof and that of
the American people toward leaks in
our financial methods?
Leading bankers in the Middle West
declare the greatest swindle ever per-
pctratec on the people of this. country
was that of few years ago when a
horde Of "get-rieh- quick" operators
spread over the Middle West selling to
agriculturists oil stock in companies
that never produced oil. packing house
shares in concerns that never packed
meat, stock in phonograph corpora
tions that never made monographs,
land speculations, etc. 1t is estimated
the farmers were robbed of $4,000, ,000,-
600. The estimate might seem high,
but for the fact that it comes from
those best qualified to know the mag
nitude of the robbery.
If the farmers had the two billions
today with which to buy tractors, fer
tilizers, build silos, purchase agricul-
tural implements, clothes and no end
of furnishings and supplies they need
it would be TO their advantage and
great aid to general industry. BY rea-
son of that robbery the farmers buy
ing power is impaired. The plundering
of the farmer affects every branch Of
American business, yet while 1t was
under way little attentions was given
to it.
Recently there have been failures of
various so-called brokerage houses. A
better term to apply to most Of them
would be bucket shops. 1t would not
be surprising II others closed their
doors.
There is little reason why a stock
brokerage house honestly and properly
conducted should fail The business is
as safe and sound as any business can
be. The function Of the broker is to
buy or sell for cash or on margin such
securities as are ordered by the Gus
toner The broker runs little or no
risk His commission is established by
the rules of the exchange. III
If the customer is purchasing out
right, he pays in full in advance. If he
is operating on margin he must deposit
a sum deemed sufficient to cover the
widest fluctation OF the market If the
market goes against the speculator, the
broker may. demand further margin,
and, if it is not Forthcoming, close the
account. For the difference between
the sum put up as a margin and the
market value of security purchased
the buyer is charged interest at the
ruling rate.
There is clearance between all le-
gitimate brokerage houses daily, and
every establishment settles its obliga-
tions with every other establishment.
The costs OF conducting brokerage
business are large and the commissions
moderate. The principal exchanges ex-
ercise rigid scrutiny over members,
suspending or expelling them for ques-
smaller exchanges are not So careful.
To many persons all exchanges look
alike. This latter fact gives opportu-
nifty TO the dishonest broker to buck
ct'' orders; that is, charge the commits
sion, but not buy or sell the security
In fact, he bets against the customer
and when he does so charges for a SER
vice rot performed, and also charges
interest on the difference between the
customers money deposited as a mar
gin and the quoted price or value of
the security, although he has not pur-
chased the security. He swindles the
customer in both cases and not infre-
Qucntly adds to this by falsifying the
quotations.
Against the broker who buckets"
orders the market player has a heavy
handicap, but occasionally luck seems
to be with him, but not infrequently
when nc has big paper profits the
broker blows up"
This whole country is speckled with
bucket shops. Some concerns have
branches in dozen or more cities. 1t
may seem because of the recent fail
ures that the losses of the public are
unusually heavy. 1t is probable that
the losses are greater when there are
no failures.
There was time when bucket shops
were drab and mean looking. Today
they are, as a rule, handsomely fur
nished and with every sign of distinc-
tiOn. But however much they are gild-
n