New Britain herald., 1929-04-15


 ders to buy and sell are executed rapidly.
 By NEA Service
 New York, April 15-Suppose you desire to buy or sell stock listed on the New York stock exchange, how is your order handled?
 If you live in Chicago, for eX- ample, your order would be given to tho Chicago office of member of the exchange. after you had been properly accredited at this office. A form is filled out, instruCting the broker. who is your representative in the exchange, 10 buy. for example 100 shares of |. s. Steel common at the market prIae.
 Your order is then transmitted over private wire to the brokers New York office. An order clerk i'm mediately sends it, by telephone again private wire to promote speed-to one of the firms tele- phone clerks in one of those hun dreds of tiny telephone stalls along the walls of the big, noisy stock eX- change
 lAnnunciatOr "rages" Broker
 The clerk at the exchange moves an electrical switch in the telephone booth which instantly causes his broker-employers number to appear on the annunciator board, where scores Of numbers are now Tapping to attract the attention brokers. This summons the broker or his represen- tative to his telephone and then. with the order for your stock in his hand. he must buy 100 shares of steel for you at the lowest price pos sible at the moment.
 The broker goes to the trading post where all U. & Steel stock IS bought or sold There he hears someone shouting that he will sell q certain amount of steel at a cer- tain price. He hears, too, perhaps someone else call Gut what he will pay for a certain amount of steel stock and thus learns, by compar- son, the prevailing market price.
 He buys for you by merely say ing: "Take it. or Sold No writ ten agreement or written memOran- dunn is exchanged between the buy ing and the selling members; all contracts made on the floor are done in this surprisingly informal manner.
 Even when the market is fairly gorged with orders and the scene is apparently one of chaotic tumult, there is no so-called ''Welshing," or backing out, on these verbal orders.
 Purchase Is Colfirmcd
 Now. your broker writes a memo paper. This reports that he has bought 100 shares of |. s. Steel common for you at such and such a price from another broker. As he waves this paper in the air, a mes senger appears to carry it to the hroker's telephone. The message is then phoned 10 your Brokers New 1ork offices, whence it is transferred to private telegraph wire and dis patched 10 his Chicago branch of- flee. Here it is presented 10 the | customer. 10 confirm the purchase.
 So swiftly does this machinery of the stock exchange operate that in some cases an order has been placed 1 in point as distant as San Francis 1 co and reported back as fully com ploted one minute later.
 Having said he would buy. your broker is now obliged 10 accept be- | fore 9 ] o'clock the next afternoon | q certificate for 100 shares of |. $. | Stn for it at the price which he agreed | he would pay when he said Sold"
 Th" customer may settle with his | broker in full. and receive a stock | certificate. or he may pay a portion | of the purchase price. if he is buying | on margin.
 Buying on Margin
 Buying on margin is the usual | form Of market speculation. lt is i q dangerous practice for the small ! investor and in most respects is really gambling
 Instead of paying for all the stock. the buyer pays for only part of if. The broker borrows money 10 car " or pay for tho rest and charges the buyer interest according to the prevailing rate for what are desig mated as call loans. These loans are uhject 10 call at any time and th" rate varies During a money strn- gency or when the market is being . taxed by heavy brokerage loans tn" q rate goes up.
 The buyer hopes this stock will \ go up so that he can make q hand some profit on the amount he has put up as margin. Suppose the . stock is sold for 2O points higher " than the purchase price. The buyer . then makes q profit of s20 @ share | on all tho shares he purchased. in cludng those covered by the brok- CTS loan less brokerage and interest i charges.
 If the market goes down, more margin money is called for by the broker. If the purchaser cannot H provide. his stock is sold at the mar ket price. and the loss frequently II wipes out his margin or what was once his capital. despite the fact I that the stock itself still may be good investment.
 The brokers commissions on buy ing and selling stock range from s,.5h per 100 shares on stocks sell ing for less than s1o a share. up 10 $40 per 100 shares for stock selling at s350 q share or above.
 Monday: How the country keeps in touch with the stock exchange.
 Bombay. India, has been having