Trading post

“ We simply add the cost of transportation to the cost price of the goods, add the desired profit and this gives us our approximate selling price. In some Exchanges, other items of overhead charges, such as clerk hire, depreciation, etc., are taken into consideration in fixing the selling price. There should be ample space in the right hand columns of Form 28, the receiving record, in which to figure the selling prices.
One of the results to be tried for in every Exchange is QUICK SALES. It is a serious mistake to keep money tied up in stock any longer than is absolutely necessary. ”

“ The objection may be made to this system that in a large exchange it would require the services of one clerk to keep the stock records alone, but when we realize that an inefficient stock record can and usually does result in losses that are sometimes much greater in value than this clerk’s wages, we see the futility of such an argument. It is useless to try to avoid the conclusion that we must keep accurate track of our merchandise. In an exchange at, say, a 5-company post, it is economy to pay one man $100.00 per month or even more, to take exclusive charge of the stock records. ”

“ The Parcel Post is now a recognized benefit to the country. All classes and conditions profit by its mutual advantage. Its gigantic strides to popular favor cannot be measured or adequately described. The burdensome exactions of the high tariffs, which corporate enterprise so long interposed, have been lifted and closer relation established between buyer and seller, by which both are the gainer. ”

“ And, as a matter of fact, many an operation in the international stocks is based upon judgment as to what the action of the exchange market portends. Similarly—‌the other way around—‌exchange managers very frequently operate in exchange on the strength of what they judge or know is going to happen in the market for the international stocks. With the exchange market sensitive to developments, knowledge that there is to be heavy selling in some quarter of the stock market, from abroad, is almost equivalent to knowledge of a coming sharp rise in exchange on London. ”

“ He would familiarize himself with the best that there is in the market, be able to advise his customer to his advantage, and then, receiving the order, could, within a brief time, have the goods sent by parcels post directly to the customer’s home, saving the expense of handling two or three times—making more money by a small commission than he does now by the larger margin on the goods which he is compelled to carry constantly in stock. ”

“ That, of course, is not the only advantage of employing a broker as agent to deal with a jobber who is a merchant. The wares of the Stock Exchange are numerous and varied; more than four thousand separate securities are quoted in the Official Price List of the market, and the number of stocks and shares dealt in which are not quoted in this list is legion. One might wander about the Stock Exchange all day, and frequent hundreds of brokers' offices which surround it, without being able to find a seller of the certain stock one wants to buy, or a buyer of the certain stock one wants to sell. ”

“ When one talks of a Stock Exchange market, he has in his mind a mere space in the Stock Exchange near some pillar or window; or, much more likely, he has in his mind the group of men who occupy it, dealing, or prepared to deal, in certain securities. Generally speaking, custom alone forms the barrier between the various departments, and the consequence is that when one particular market attracts many members by reason of its animation, the dealers in the busy part frequently overflow the fancy boundaries and press hard upon the neighbouring space. ”

“ That leaves the country merchants, the jobbers, the railroad and express company raiders and their hired opinion molders to account for. Of these, the country merchant is by far the most numerous, likewise the most deserving of consideration.
On a previous page I made it fairly clear, I think, that a good, cheap parcels post service would be of great service to him. He has the respect and the confidence of his customers. He knows the worth of goods. He can sell the goods—any line or make—at the advertised or catalogued price and still make a good profit, as I have previously shown. ”

“ Next come the big dealers in exchange, some of whom do a regular exchange business of their own, the same as the bankers, but who also have men out on the street "trading" between large buyers and sellers of bills. Such houses are necessarily closely in touch with banks, bankers, exporters, and importers all over the country, and have always large orders on hand to buy and sell exchange. Some of the bills they handle they buy and use for the conduct of their own business with banks abroad, but the more important part of what they do is to deal in foreign exchange among the banks. ”

“ If you want goods of the same grade as those sold by the mail order houses, I can sell them to you, and at the same price. And I also have better goods which will cost you more. But I can give you exactly what you want, and as cheaply as any one.’
“In the meantime the country merchants have been able to greatly reduce the stocks carried in their stores. This reduced the amount of capital tied up in their business. And yet, by means of the catalogues, their customers were able to select from as large an assortment as they could in the largest stores, in Berlin. ”

“ If there is a stock operation in the conduct of a foreign exchange business it is the selling by bankers of their demand bills of exchange against remittances of commercial and bankers' long paper. Bills of the latter class make up the bulk of foreign exchange traded in, and its disposal naturally is the most important phase of foreign exchange business. What the foreign exchange business really is grounded on is the existence of commercial bills called into existence by exports of merchandise. ”

“ If one of his customers is driven to go elsewhere, it is not only because the merchant cannot afford to keep in stock the particular class of goods desired, but because he cannot afford to ship these goods in small quantities, on account of the prohibitive rates of the government’s postal parcels charges of sixteen cents per pound, or the almost equally prohibitive rates of the express companies. ”

“ No rule can be laid down as to what profit bankers expect to make on shipments. If, for instance, a banker owes £200,000 abroad himself and finds it cheaper to send gold than to buy a bill, the question of profit does not enter at all. Then, again, many and many an export transaction is induced by ulterior motives—‌it may be for the sake of advertising, or for stock market purposes, or because some correspondent abroad needs the gold and is willing to pay for it. ”

“ One must have reliable colleagues on the foreign Exchanges who are constantly watchful and alert, and who are moreover possessed of sufficient capital to finance large transactions. In addition, there are labyrinthine difficulties to surmount in the way of commissions, interest charges, insurance of securities in transit, fluctuations in the money markets abroad and at home, cable tolls, letters of confirmation, rates of foreign exchange, settlement days, contangoes, and many other matters. ”

“ Business must be better with banking, apparently at least, when the buying and the selling of drafts on the people of foreign countries is brisk than when it is dull. It must be better, also, with exporters who draw the drafts and sell them. The drawing and the selling of drafts against foreign balances is surely a more profitable occupation when there is an excess of exports to draw against than when the balance of trade is the other way. It must be even more satisfactory in those connections when the excess of exports is continuous. ”

“ Under such conditions it is not difficult to see how hard it is to make any money to speak of out of foreign exchange brokerage.
The dealers, of course, fare much better. Handling commercial bills where the question of credit affects the price, they have a chance to make more of a profit, and buying and selling bills for their own account they naturally are entitled to make more than the man without capital, who simply tries to get in between the buyer and the seller. ”

“ 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. ”

“ The day are gone when the merchant adventurer sent out his ships, laden with merchandise, which were to bring home to him the produce of distant lands. There are, of course, a number of merchants who, having their own establishments in foreign parts, do both an import and an export business, balancing their own transactions without many bills of exchange passing; but, on the whole, trade is now much more specialised, there are importers and exporters, and their transactions are entirely independent of each other. ”

“ The ultimate consumer pays 12 cents a basket, sometimes more, sometimes, when the market is glutted, a little less. Here is 9 cents of “distributive costs” of which but 3 went to our friend, the “small retailer.” The rest went to more or less centralized distributing agencies. Now suppose on the other hand that the farmer could send his products direct to his list of regular customers in the city. It would be perfectly feasible with a parcels post. ”

“ During the autumn months, under normal conditions, the advantage is all with the buyer of foreign exchange. By every mail huge packages of bills, drawn against shipments of cotton, wheat and corn, come pouring into the New York market. Bankers' portfolios become crowded with bills; remittances by each steamer, in the case of some of the big bankers, run up, literally, into the millions of dollars. Naturally, any one wanting bankers' exchange is usually able to secure it at a low price. ”

“ Seeking to free itself from the shifting influence of speculative trading, by taking the business out of the hands of middlemen at home, the Exchange found it quite as important to maintain the control of its own affairs in the markets. ”

“ The local merchant who conducts his business well has nothing to fear from the mail-order house. Farmers and citizens prefer dealing with the home man, and the parcels post will give him many advantages that will enable him to increase his trade to proportions which are now impossible. ”

“ The exemption also covers trading by a scalping broker who makes his profit in fractional movements on the exchange, buying and selling with great rapidity, thus often purchasing and selling the same amount of the commodity at the same price within a few moments or hours. ”

“ Through the processes of Trade, myriads of commodities for the satisfaction of human wants, commodities produced by human service to the point of delivery to ultimate consumers, flow to ultimate consumers out of retail stores. These depots for final delivery in Trade are the customary terminals of production, where certifications of service in terms of Money are usually exchanged for products of service in the form of commodities. ”

“ By means of the parcel post, producer and consumer are to be brought into [Pg 202] direct relations the one with the other. All middlemen and their profits will be eliminated, and either the producer will get more for his products or the consumer will pay less—which of these will happen does not appear: probably in some degree both are hoped for. ”

“ If those two or three distinct foreign trades should happen to be carried on by two or three distinct merchants, of whom the second buys the goods imported by the first, and the third buys those imported by the second, in order to export them again, each merchant, indeed, will, in this case, receive the returns of his own capital more quickly; but the final returns of the whole capital employed in the trade will be just as slow as ever. ”

“ The chance to buy a hundred shares of some stock, in London, for instance, and to sell it out at the same time in New York, at one-eighth or one-quarter more, is what the arbitrageurs are constantly on the lookout for. With the proper facilities, an expert, in the course of the hour during which the London and New York Stock Exchanges are simultaneously in session, is often able to put through a number of profitable trades. ”

“ At times there has been protest against the stipulation that a member of the Stock Exchange shall not be connected with any other institution of the kind. There have been several movements for the formation of exchanges for mining share business, and even for the establishment of rival stock exchanges, and a year ago one of the great London newspapers established a system of direct dealing between its readers for nominal fees. ”

“ So much for the transaction from the importer's standpoint—‌what does the seller of the goods get out of it? Payment for his goods as soon as he is ready to ship them. No waiting for a remittance, no drawing of a dollar-draft on an obscure firm in Paterson, N.J., which no Canton bank will be willing to buy at any price. The credit constitutes authority for the shipper to draw in pounds sterling on London—‌the one kind of draft which he can always be sure of turning at once into local currency and at the most favorable rate of exchange. ”