File:Wall Street guide - (1902) (14597816588).jpg

Identifier: wallstreetguide00jlmc (find matches)
Title: Wall Street guide /
Year: 1902 (1900s)
Authors: J.L. McLean & Co.
Subjects: Stock exchanges
Publisher: New York: J.L. McLean
Contributing Library: Columbia University Libraries
Digitizing Sponsor: The Durst Organization

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aul at 170. And yourbroker records the transaction, and your purchase ismade. The other broker, whom we will call Brown,has agreed to deliver 100 shares of St. Paul, althoughhe does not own the stock. He, Brown, is then short of 100 shares of St. Paul. Now, if he turnsaround immediately and buys 100 shares, he will, ofcourse, obtain the certificates with which to makedelivery to your broker; but if he buys the stockthen he will have to pay 170 for it, and thereforehe can make nothing by the transaction. However,the certificates must be delivered to your broker,as per Browns agreement; so, during the last fifteenminutes of the session, Brown goes into the loancrowd on the floor of the Exchange and borrows 100shares of St. Paul from some one who has it to lend,and these certificates he delivers to your broker,thereby completing his contract. Your broker now holds for you 100 shares of St. Paulfor which he paid Brown 170, and Brown is short 100 shares. That is to say, he owes that amount
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WALL STREET GUIDE. 13 of stock to the lender, whom we will call Wilson.Next day, let us say, the market price of St. Pauldeclines to 1(55, and then Brown steps into the crowdand purchases 100 shares of that stock at the rulingprice. Thus he obtains the certificates with whichto replace those he borrowed on the previous dayfrom Wilson, and now all of his obligations arecancelled. Yesterday he borrowed 100 shares from Wilsonwith which to make delivery to your broker, andto-day he buys 100 shares with which to return hisloan—and now he is even on the market, andjust $500 ahead on his deal, for your broker paidhim $170 per share for the stock which he was able,a day later, to purchase for$lG5 per share. Do you see anything about such a transaction thatsavors of gambling? We think you will agree with us that it was per-fectly legitimate, and purely the result of businessjudgment. HOW TO OPEN AN ACCOUNT. This is a very simple procedure and little need besaid. Merely forward draft, money o

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