Stocks

“ If the market was for any reason active, the brokers and their agents were apt to be more numerous than if it were dull and the trading indifferent. A gong sounded the call to trading at ten o’clock, and if there was a noticeable rise or decline in a stock or a group of stocks, you were apt to witness quite a spirited scene. Fifty to a hundred men would shout, gesticulate, shove here and there in an apparently aimless manner; endeavoring to take advantage of the stock offered or called for. ”

“ When some favorite railroad stocks are to be forced upon the market, these brokers, who can do so at pleasure, supply the money market, and sell the stocks at a large profit; and when the object is to reduce the value of stocks, they withdraw from circulation a sufficient amount of the currency to cause a stringency in the market, until their end is accomplished. ”

“ At each of the posts, and along the north wall, the specialists in these various groups of stocks are at work before the opening of the market, entering the day’s orders in their books, some with the rapid energy that betokens an active opening, others with an indifference that spells dulness in their particular line. ”

“ Loans of stock and sales of stock appear alike in the transactions of the Clearing House. Moreover, apart from the necessities of the bears for stocks to deliver, we have the necessities of the [Pg 372] bulls for money to carry their stocks. If a broker who has borrowed largely from the banks finds his customers turning to the bear side of the market, he has an excess of funds. ”

“ Stocks, in the American sense of the term, are properties consisting of shares in joint stock companies or corporations, or in the obligations of a government for its funded debt. In England, government obligations only, are called “stocks,” and the obligations of companies or corporations are called “shares.” ”

“ This may be seen and illustrated by the fluctuating price of that species of capital, called stocks, which is to be found in the market of every civilized community. The price of stocks never makes a false report, as to the political aspects of society, but is as infallible a guage in this particular, as is the thermometer of the weather ”

“ The Government Funds, stocks and shares in all companies, bonds, foreign and otherwise, Corporation Stocks, &c., are all termed "securities." A convertible se- curity is one which may be sold in the open market, there being no restriction upon the persons who may hold it.
We will now endeavour to put before the reader some account of the various "securities" in which the public invest their money accord- ing to individual choice, and which (with the exception of mortgage on real property-land or houses) may be bought and sold in the stock- market through the agency of a banker or broker. ”

“ Preference stock may be purchased in any amount in the market, and the interest war- rants are sent half-yearly to the registered holders.
Ordinary stocks depend on the profits for the year for the interest they yield, and thus afford a wide field for speculation. The stocks of the great English lines may be relied upon as a good investment, the profits being steady and sufficient to assure a fair amount of interest after satisfying the prior claims of debenture and preference stocks. ”

“ We will assume these bargains are done in the middle of an account. On the day of the purchases the several stocks rise 1⁄4 to 1⁄2 per cent., and he goes home a happy man with his contracts in his pocket, reckoning the gain he has already made, and sleeps like a top. ”

“ You have no idea of the credulity of some folks. I say that it has not been cornered, and I will not only prove it, I will demonstrate it. Whenever the Stock Exchange or some of the members have a corner on stocks, that stock goes up, and if it does not, that corner bursts. ”

“ These constitute the important intermediary which transforms stock exchange securities into the basis of bank-loans. The commercial banker buys, in general, not the stocks, but the note of the private banker, broker, speculator, or investor, with the stocks as collateral. If investment bankers, speculators and investors decide to support old ways of doing things, the banks lend on the securities of the old kinds of businesses; if investment bankers, speculators and investors turn to new things, the commercial banks follow suit. ”

“ In large cities the brokers naturally unite for convenience of business in the so-called stock exchange, in which the market price of all current forms of indebtedness or deferred payments is fixed from day to day, or from hour to hour, by the higgling of the market, just as the price of produce is fixed in the produce exchange. Naturally, as in the case of produce, a fictitious business, purely speculative, grows up around the legitimate dealing [pg 163] in stocks and bonds. ”

“ The rise and fall in stocks may sometimes indicate the demand and supply, which again are governed by the disposition of men to purchase more than intrinsic value or change of condition justify. If many persons at the same time seek to buy large quantities of a stock it is sure to advance ”

“ The speculating public gets action, likes it, and invests money that might have been used in margin-trading on the New York Stock Exchange or for "investment" in the constantly fluctuating low-priced industrials or higher-priced mining stocks that are sponsored by big interests with New York Stock Exchange affiliations. ”

“ But with speculators the direction should be, “Do as they do, but not as they say.”
The chief form of speculation is in stocks. These stocks may be railroads, mines, wheat, corn, cotton, wool, tobacco, oil, gas, coal, and, in fact, almost any industry where capital has constantly vacillating values. We have room to mention only a very few:
942. City Bonds.—These are generally among the best securities for investment. The element of speculation comes in when they are bought below par in the belief of an early rise. ”

“ If he wins, instead of withdrawing the original capital, with perhaps a little more, he usually stakes the whole amount on every venture until it is lost.
Viewing the stock market calmly in the perspective, it is not a question whether stocks will rise or fall ”

“ While the Stock Exchange is in theory a private institution, it fulfills in fact a public function of great national importance.
That function is to afford a free and fair, broad and genuine market for securities and particularly for the tokens of the industrial wealth and enterprise of the country, i.e., stocks and bonds of corporations. ”

“ They perhaps raise the money required, and for a few days breathe again, when there is a further decline in stocks, and the brokers are again sending notes to their customers telling them that if they do not put up more money they will be sold out. ”

“ I also demanded and received information in advance of any extensions of railroads, standard or interurban, of contemplated improvements of whatsoever character, and I doled out this information to those of my followers in whose jurisdiction lay such territory.
My own fortune I augmented by advance information regarding the appreciation of stocks. If an amalgamation of two important institutions was to occur, or if they were to be put upon a dividend basis, or if the dividend rate was to be increased, I was told, not only in advance of the public, but in advance of the stockholders themselves. ”

“ London, Simpkin, Marshall, Hamilton, Kent & Co., 1900.
16 The Stock Exchange is an organization of individuals formed for the purpose of listing securities and for facilitating the sale and delivery of stocks.... Through its agency corporations are enabled to sell their shares and get the money capital to conduct their business. The Stock Exchange has come into existence because of a demand for trade facilities that will adjust differences of opinion in reference to future values of corporation securities and give the purchaser some idea of values. ”

“ It is thought that stocks will become stabilized at their actual worth levels, some higher and some lower than the present ones, and that the selling prices will be guided in the immediate future by the worth of each particular security, based on its dividend record, earnings ability and prospects. ”

“ We have thus a ceaseless stream of new issues of stocks, mortgages and commercial paper, and have, therefore, at all times outstanding a large amount of obligations which, from the uncertainty of their basis, are liable to wide fluctuations in value. Besides these absolutely new investments, we have also at all times an equal or larger amount of obligations issued against enterprises which, although not properly new, are still in an unconsolidated and experimental stage, and the value of which is, therefore, subject to wide fluctuations. ”

“ Every sort of industry was incorporated and over-capitalized, and notwithstanding the hundreds of millions of new shares lately issued it was currently reported that stocks were very scarce; that they had nearly all gone into “strong hands;” ”

“ The Inscribed or Registered Stocks of most of the Colonial Governments are dealt with in the same way, as well as Indian stocks and the stocks of many of our larger towns. The account of an investor may be added to or diminished at any time with- out difficulty or delay. ”

“ More recently, bankers’ syndicates have, in many instances, received for floating preferred stocks of recapitalized industrial concerns, one-third of all common stock issued, besides a considerable sum in cash. ”

“ The treasury stock is excluded because it is a hoard which does not become adjusted to needs of payment in the sense—or at any rate in the degree—that the stocks in merchants' tills and in people's pockets become adjusted. ”

“ Sign-posts are placed about the floor, bearing the names of the different stocks dealt in, and around these posts the brokers gather to buy and sell. When a particular stock is what is termed active, the brokers dealing in it surge madly around the post assigned to it, and amid deafening yells make their contracts. ”

“ Formerly the usual practice of those banks which had considerable business with the Stock Exchange was to lend large sums on high-class stocks to wealthy brokers, who employed the money inside the house in carrying over the accounts of their clients, or to other brokers whom they trusted. ”

“ Of course, if the pressure gets too strong, it will manifest itself at the money [Pg 373] post anyhow, since bears borrowing particular stocks will forego all or part of the interest, or even pay a premium for the stock. [438]
Now it is possible, from the figures given for the total clearings of the Stock Exchange Clearing House, in conjunction with the figures of recorded sales, and the percentage of "X-Clearing House" sales, to get a fairly accurate idea of the magnitude of these stock borrowing operations between brokers. ”

“ It is of course a sort of revolving asset, that is, merchandise is purchased and sold continuously, so that the stock-in-trade is constantly being turned over. The rate of turnover is very important, as will later be seen.
Investments. This asset represents the stocks and bonds of other companies, municipalities, school districts, and so forth, owned by the business. As a usual thing there are seasons of the year when the cash funds of a business are built up and lie idle in the bank unless they are invested in securities of some sort. ”

“ The act appears to have been ill observed, for in 1376 the Commons prayed Edward III. that stocks should be set up in every village. Though never expressly abolished, the punishment of the stocks began to die out in England during the early part of the 19th century, though there is a recorded case of its use so late as 1865 at Rugby. In many of the villages in the country may still be seen well-preserved examples of stocks, in some cases with whipping posts attached. In the United States stocks were of frequent use in the 18th century, more particularly in the New England States ”

“ 'Tis sweet to know that stocks will stand
When we with Daisies lie —
That Commerce will continue —
And Trades as briskly fly —
It makes the parting tranquil
And keeps the soul serene —
That gentlemen so sprightly
Conduct the pleasing scene! ”

“ Anderson has given us a curious table of the crowd of new projects that jostled one another in the money-market, and also an interesting description of the general scene of competition and clamour among the dealers and purchasers of the various stocks, which seems to be taken from personal observation. Of the great legal corporations whose stock was raised for the time to extravagant prices he enumerates, besides the South Sea Company, whose original 100l. shares came at last to sell for 1000l. each, the East India Company, whose 100l. ”

“ It would pay you to mortgage your property, or sell it, and use the money in Wall Street.”
“I have about twenty thousand dollars in bank stock.”
“That could readily be sold.”
“What investments would you suggest?”
“I couldn't tell you on the moment; but I think favorably of a mining stock lately put on the market. I have private advices that it is likely to develop extraordinary richness and the stock may even treble in three months.”
“Where is the mine?” asked the squire, eagerly. ”

“ When this corporation was first organized I subscribed for some stock and was in its first board of directors and its vice-president. If there was to be a new source of supply of the commodity I dealt in so largely, it was important I should know of it. As soon as I became satisfied that it was nothing but a scheme to make money by the sale of stock, I resigned and disposed of my holdings to one of the promoters at a profit of eight dollars per share. ”

“ There are now six industrial companies with an aggregate capital of 171,927,540 shares outstanding; and from the side lines it looks as if there ought to be time enough to start another boom when the stock market gets over its present case of indigestion.
In the final analysis the following essentials should be constantly borne in mind: The stock and grain markets are always capable of playing new tricks on you—of doing things you never dreamed of. ”