The New York herald., 1922-05-30

day is that of J. d. Sugarman 20.
which failed for $50,0o0. This firm had
actually been expelled from the Consoli-
dated Exchange some six weeks or SO
before it's failure.
In the course of the preparation or
these articles certain questions were put
to W. S. Silkworth, president of the Con-
solidated, in order that both sides or tfe
story might be told. From Mr.. Silk
worth's statement it appears that despite
the large number of failures the Consol-
idated membership is not seriously af-
fected. He is authority for the state
ment that while the membership on
December !. before the furry. was 447.
on April IS it was 446. This would
indicate that the loss in membership due
10 failures and eXpulsions had been
ma de up by new memberships.
Figures Do Not Agree.
Nor did the Consolidated admit at
that time that twenty seven of it's MEM
Der houses failed. The figures given
by Mr.. Sili<worth are slightly different.
He says that twenty-five firms failei
and that OF these fourteen had been
suspended by the exchange before the
failure.
In the first article Of this series the
Consolidated Exchange was compared
TO what at one time was known as the
dollar book" on the race track. 1t may
be that in this very comparison the rea-
son for the numerous failures of Con-
soidated houses may be found. seat
on the consolidated costs about $500.
while seat on the New York Stock E.x
change costs upward Of 100000. In
both cases the price varies according to
times market conditions and so on, but
To- 4.al,
the same
change is in the nature of a capital in
Nestmcnt. Failure and expulsion means
the loss, In one way or another. OF the
scat. The seat is an asset on which the
creditors have claim.
A broker who carries on business in
such a way that failure is likely, knows
he is riskng his exchange seat. as we'll
as any other investments he may have
made in his business. If his seat has
cost him 100000 he may think over
the matter much longer than il his seat
has cost him only $6.500 There are
many more men who will take Il
chance" with $500 than there are who
will risk losing a piece Of property
worth 100000.
SO again the Consolidated brokers are
III a. pOsilIOii VI tue uOliaf DOOk IN
dividual at the race track. Their in
ves:ment is small: the chances of profits
large. They can start with compare
lively few thousand dollars, get MEM
bership on the Consolidated rent n suite
of rooms, get furniture enough on cred
1t, and enough yards of blackboard to
make the customers room" look i'm
portant and go to work. The next step
Is to get customers. How the bucket
shop variety of brokers operate after that
was thoroughly told in the NEW YORK
HERALp's series OF articles on that topic
Where does the Consolidated Ex-
change enter as to all this? What are
its functions?
To begin with. II has no responsibility
other than to its own members. IT is
not necessary that an applicant for
membership shall be person who might
be acceptable 90 the District Attorney
or the Association of the Bar. The one
thing to be determined is whether he is
acceptable TO the Exchange membership
as represented in its elected officers
But what this may lead to is revealed
by the case of e. J. Callahan Of whose
sudden and disastrous failure President
Silkworth remarked: That was the
dirtiest failure I ever heard Of"