Chapter II: The Exchange

The origin of the commercial exchange is coeval with the beginning of commerce. According to that eminent Oriental scholar and historian, Rawlinson, the city of Babylon contained several of these marts, each devoted to the sale of some particular description of merchandise, and Herodotus intimates that one of them was set apart exclusively to the sale of wheat, corn, barley, millet and sesame. Athens and Rome also had their exchanges, and during the middle ages the traders of Venice were wont to assemble in the Rialto. Marseilles boasted of a Chamber of Commerce in the fifteenth century, and as early as 1566 London merchants were accustomed daily to convene in the open air at various localities in Lombard Street, until the erection of the present Royal Exchange, and to-day exchanges or bourses are among the prominent commercial features of every great European city.

The idea of a commercial exchange germinated in the United States before the war of the American Revolution. Here, as in Europe, the basis of every mercantile exchange is a voluntary union of business men, who deem it for their mutual interest regularly to assemble in some convenient locality, for the purpose of effecting the sale of commodities or securities, and of profiting by the fluctuations in market prices. Stock exchanges, produce exchanges, chambers of commerce and boards of trade are all essentially identical in character, the principal point of difference being the nature of the commodities bought and sold.

The New York Chamber of Commerce, founded in 1768, is the oldest organization of this kind in this country. Similar institutions were established in Baltimore in 1821, and in Philadelphia in 1833. In 1858 there were ten chambers of commerce and twenty boards of trade between Portland and San Francisco. In 1865 these bodies organized what is known as the “National Board of Trade.” In this association are represented Albany, Baltimore, Boston, Buffalo, Charleston, Chicago, Cincinnati, Cleveland, Denver, Detroit, Dubuque, Louisville, Milwaukee, Newark, New Orleans, New York, Oswego, Peoria, Philadelphia, Pittsburg, Portland, Providence, Richmond, St. Louis, St. Paul, Toledo, Troy and Wilmington.

As an institution, the commercial exchange has been productive of some good, but much harm. If restricted in its scope to the legitimate purposes of commerce, it is unquestionably of the highest benefit to the business world. When its operations are diverted into illegitimate channels it becomes a source of incalculable injury to society. As a great market place, it plays an important part in modern civilization; as a gigantic agency for the promotion of gambling in the commodities of the world, it is a snare, a delusion and a curse.

Not all the gaming hells of the country combined afford facilities for gambling equal to those furnished by these organizations. The faro dealer places a limit upon the stakes wagered; upon the floor of ’Change one may bet without limit. Not everyone can obtain admittance to the gilded _salon_ of the tiger; the commission merchant, or broker, who does business upon the Stock Exchange or Board of Trade accepts orders from all comers. The character of the transactions in which his principals engage is to him a matter of indifference, his interest being centered in their frequency and extent.

To one who is not versed in the methods of conducting trading in the mercantile exchange, the jargon of the ordinary journalistic report of a day is unmeaning gibberish. “Longs” and “shorts,” “puts, calls and straddles,” “scalpers” and “plungers,” a “squeal,” a “squeeze,” an “unloading,” are terms as destitute of significance as though they were words from a foreign tongue. Yet the mode of doing business is not so complicated that any man of average intelligence need fail to grasp it. The author—as he has already stated in his autobiography—was once connected with a firm operating on the Chicago Board of Trade, and as such, acquired an intimate acquaintance with the _modus operandi_ of its dealings, and he believes that his work would be incomplete should he ignore the marble palace through whose noiselessly swinging doors so many thousands have entered upon the path of shame which leads to ruin. Not that the Chicago Board of Trade is either worse or better than the score of similar institutions scattered through the country; nor is it intended to select that organization as the object of special animadversion. The methods of all commercial exchanges are, as has been said, substantially identical.

Members of these bodies may be classified on any one of several general principles. One system of classification has relation to the character of their operations; in other words, all members may be divided into two classes, the first comprising those who venture on their own account (popularly known as “speculators”), and the second embracing those who buy or sell only on the receipt of orders from outsiders (_i. e._, brokers). Under another system, members may be classified as those who wish to enhance the prices of commodities on the one hand, and those who, on the other, seek to depress market quotations. The former are technically known as “bulls,” and the latter as “bears.” These sobriquets are derived from the well-known propensities of the two descriptions of animals, the one to hoist and the other to pull down. A “bull” is one who seeks to advance prices; a “bear” one who strives to lower them. The distinction between “longs” and “shorts” is substantially of the same nature. A “long” is a speculator who, believing that the price of a certain commodity is destined to advance, buys freely in anticipation of a rise. It follows that he is naturally, if not inherently, a “bull.” On the other hand, a “short,” judging that quotations are destined to decline, sells wherever he can find a purchaser. He, naturally, is a “bear.” It must not be forgotten, however, that neither of these parties for a moment actually expects either to receive or deliver the articles which he buys or sells; and the reason for this apparently inconsistent statement will be explained hereafter.

With these few prefatory words of explanation, we will pursue the course of the speculator, after which will be given a definition of the slang terms used, and following this the reader will find a concise description of the adventitious agencies employed in the manipulation of the market.

And first, as to the speculator: He may fall within either one of two categories—the professional or the occasional. Yet even under the general caption of professional speculators, operators may be divided into two classes. One embraces men whose large wealth enables them to contrive and engineer what is popularly known as a “corner;” the other includes those who follow in their wake, believing that they can discern their intentions, and laying the flattering delusion to their souls that they can presage the course of prices. The professional speculator, as being the “larger fish,” should first claim our notice. He it is who originates and conducts “corners,” by which term is meant the forcing up of prices for any given commodity to a point far beyond their legitimate value, with a view to enriching the few at the expense of the many. Men of this stamp ordinarily associate with themselves kindred spirits, whose natural bent is the same as their own, and whose capital may prove of value in carrying out their schemes. The combination having been formed, the first objective point is the selection of some commodity or stock to “corner.” The choice having been made, the next step is, quietly and unostentatiously to buy all of it that can be purchased. Let not the unsophisticated reader for a moment suppose, however, that the syndicate thus formed proposes to buy the article in question at current rates. Far otherwise. Prices must be depressed, and there is an obvious way in which to effect this result. Every market in the world is supposed to be governed by the normal relations between supply and demand. It follows that free offerings of any commodity are likely to reduce its quotable value. What, then, are the tactics of the “operator”? Evidently to offer to sell freely. Under the influence of the precipitation of large lots, prices recede, and the speculator is shrewd enough to purchase “at the bottom of the market.” Of course he does not expose his policy by buying such enormous quantities in his own name. He has recourse to firms doing a strictly commission business, of whom he employs a multiplicity, and who always refuse to disclose the name of their principal—not from any high sense of honor, but from motives of self-interest, for the simple reason that such exposure would result in a peremptory withdrawal of business. Having secured the desired quantity of the stock or commodity selected, the clique proceeds to advance the price, not abruptly but gradually, selling a little here and buying a little there, the object being the mystification of the miscellaneous dealers. At last comes what is known as the “squeeze.” The cabal having all, or at least the great preponderance, of the article where they can, if they choose, call for its immediate delivery, refuse to entertain any offers at less than the limit fixed. The consequence is that the “shorts”—i. e., the men who have sold to the syndicate—are compelled to settle at the price to which the coalition has forced quotations. The method of operation can be best illustrated by a suppositious case. Let us suppose—simply by way of illustration—that a coterie of dealers in grain resolve to force up the price of wheat, although not to localize the illustration, we might assume the formation of a “corner” on some one of the numerous stock exchanges with which the country is blessed (?), or cursed. But let us take the Chicago Board of Trade, with whose methods the author is most familiar: Let us suppose that the article to be “cornered” is “July wheat,” and that the combination has been formed in March. Resort is had to the tactics above explained. Wheat for July delivery is first depressed, then bought, and in the end sold without regard to its inherent value, but solely with a view to what the “shorts” may be forced to pay. The profits of such “corners,” thus constructed, are sometimes enormous. Yet, as in the game of faro, the most expert dealer is sometimes put to heavy loss by the combination which is playing against the bank; so even the machinations of the strongest and shrewdest operators are brought to naught either by a combination of brighter minds, by a failure carefully to guard every weak spot, or, it may be, by very chance. The same elements are present in both games, faro and stock-jobbing. These corners are conceived in cupidity, carried on in deceit, and consummated in heartlessness; yet there are not wanting those who affirm that the commercial exchange is the very prop and bulwark of American commerce! That the exchange, in its legitimate scope, affords an easy and safe way of doing business, cannot be denied; that its practical operation is to foster speculation and encourage reckless gambling is equally indisputable.

This assertion seems, on its face, perhaps, ill-considered, yet it is abundantly justified by facts. We have, thus far, considered only the tactics of the professional “operator.” Let us, for a moment, consider the fortune (or misfortune) that awaits the occasional speculator. The latter closely resembles the man who plunges, headlong, into the Niagara rapids without even a rudimentary knowledge of the art of swimming. Like a chip, he sports upon the crest of the eddying waters of the whirlpool, until, gradually drawn nearer and nearer toward the centre, he is sucked into its very vortex, sinking to reappear no more. Yet this comparison is weak. The outside speculator who fancies that he can buy or sell on “pointers,” (i. e. private information) given him by parties well- posted, very nearly approaches an idiot in the matter of intelligence. Let us take, as a single illustration, a case which fell under the author’s personal observation. The experience of the victim (whom we will call Jones) is by no means exceptional. Mr. “Jones” was advised by a friend (?) that “old Higgenbotham” had bought up all of a certain article and that within sixty days prices were destined materially to appreciate. Naturally “Mr. Jones” found his interest, as well as his cupidity stimulated. What would his friend recommend him to do? “Buy, of course; and buy heavily,” was the answer. “But I don’t know how to buy,” objected Jones. “Why,” replied his advisor, “that’s the easiest thing in the world, Q X & Z, one of the best houses in the street, are particular friends of mine. Take my card and go down and see them. They’ll use you right.” The unfortunate “Jones” listened to the siren song. He interviewed Q X & Z, by whom he was received with distinguished consideration. The firm of brokers explained to him how he could, by depositing with them a “margin” of five per cent. on the par value of his prospective purchase, become the putative owner of twenty times the amount of his deposit. Of course he must buy for future delivery, this not being a “cash” transaction. But there was no doubt that prices would advance. Oh, certainly not.

Mr. “Jones” was naturally a little timorous, being unaccustomed to speculation. He advanced a few hundred dollars, however, by way of “margins,” and at the conclusion of the “deal,” found himself winner by a handsome sum. His experience was a revelation to him. He ventured again and again, with varying success. Finally he found himself heavily interested on the wrong side of the market. He was assured that prices must necessarily take a turn, and he could ill afford to lose the sum already risked.

To understand the nature of the risk which he had incurred, however, some explanation of the method of speculating by means of margins is necessary. To illustrate: let us suppose that a certain article—say, wheat is to-day at $1.00 per bushel, of course 10,000 bushels are nominally worth $10,000. Imagine a legitimate purchase of such a quantity at these figures. Should the price advance one cent per bushel, the 10,000 bushels would be worth $10,100; should it fall off one cent the wheat would be worth only $9,900. In the former case the buyer would win $100; in the latter he would lose a like sum. In the case of a bona- fide sale, the whole of the $10,000 is actually paid. In a speculative transaction the purchaser only advances a part of the price, usually a few cents per bushel, which is placed in the hands of his broker, who gives him a receipt therefor. The commission merchant conducts the business in his own name, assuming personal responsibility for the payment of the money. To protect himself against possible loss, which may result from violent fluctuations in the market, he insists upon a marginal deposit as above stated. Should the depreciation in value approach the limit of the margin, the speculator is called upon to advance more money. If he fail to do so, and the decline continues, the broker protects himself by selling out the article bought, charging his customer with the loss sustained, together with his own brokerage charges, and handing over to him whatever small balance may remain to his credit. In the case of a speculative sale, precisely the same methods are employed, except that as the seller’s gain is derived from a depreciation and his loss through an advance, when the “margin” is in danger of being “wiped out,” the broker closes the transaction by buying on the customer’s account instead of selling.

But to return to the experience of Mr. “Jones.” As has been said he had ventured largely, and he found himself confronted with financial ruin. Although engaged in a money-making business, he had plunged so deeply into the maelstrom of speculation that his capital was seriously impaired. What was to be done? To withdraw meant bankruptcy; yet, how could he go on? Only one way presented itself to him. He was the executor of his brother’s will and the guardian of his brother’s minor children. The trust funds placed under his control might be utilized to avert impending disaster. Not that he would wrong the orphans whose patrimony had been committed to his care, but he would temporarily borrow the money of the estate, to be returned with interest, within a few weeks. He succumbed to the temptation and the result need hardly be told. The combination formed for the purpose of controlling prices absorbed these funds as it had the others, with the same relentless rapacity as do the knights of the green cloth the last hard-earned dollar of the day-laborer. The day of settlement arrived, the bubble burst and the unfortunate man found himself buried fathoms deep in dishonor and ruin. Not only was he penniless, but he realized that wherever he went the finger of scorn pointed out his every step. A temperate man before, he plunged headlong into dissipation. His wife found herself compelled to leave him, and to-day, stripped of fortune, bereft of family, deserted by friends, he walks the streets with faltering tread, aimlessly and hopelessly; living God knows how; hanging about bucket-shops and pool-rooms, considering that a fortunate day on which, honestly or dishonestly, he can earn half a dollar.

Nor is this an isolated case. The speculator who has been alluded to is but a type of a class of men whose name is legion. The ruined reputations of confidential clerks, cashiers and administrators of trust funds mark the path of the reckless operator as milestones mark the causeway. The terrible fascination of gambling, whether through speculation or cards, when once the votary has succumbed to it, can be most fitly compared to that of the opium habit. The victim of this body- debasing, soul-destroying vice is willing to risk his hopes, not only for time but for eternity, on the gratification of his appetite. So does the devotee of the faro table or the man infatuated with the allurements of the exchange stake his life, his honor, his very salvation upon the turn of a die or the rise or fall of a particular stock.

Better, far better, were it for the man who enters a gaming resort that his first wager prove unsuccessful; far happier would he be who determines to “speculate in futures” did his first venture result in heavy loss. In either case the influence of failure would prove a deterrent sufficiently powerful to avert years of future misery, if not ultimate destruction.

The technical nomenclature of the exchange—sometimes termed the “slang of the street”—which, as has been remarked, is incomprehensible to the uninitiated, in itself affords some key to the nature of the business transacted. Some of the most common terms are here defined, although to enumerate them all would swell the dimensions of the present chapter beyond the limits assigned it.

A “scalper” is an operator who makes it his practice to close his transactions as soon as he can see a small profit, say a quarter of one cent. His operations are neither more nor less than betting on a rise or fall in prices.

The “guerilla” is a species of the genus “scalper,” few in number, and makes a specialty of dealing in stocks and commodities: So unsavory is the reputation of this class that it has fixed the appellation of “Hell’s Kitchen” and “Robber’s Roost” upon certain localities in the New York Stock Exchange.

Still another class is composed of those who strive to enrich themselves by the fictitious rise and fall of a particular stock in which they constantly deal.

The terms “long” and “short,” when used as adjectives, have been already explained, and their signification when employed as nouns is practically the same. A “long” is a speculator who has bought heavily in anticipation of a rise. A “short” is one who has sold freely in expectation of a decline. The action of the former is called “loading.”

“Forcing quotations” is keeping up prices by any means whatever. When this is accomplished by the dissemination of fictitious news or the circulation of unfounded rumors, the operator is said to “balloon” prices.

A speculator is said to “take a flyer” when he engages in some side venture; he “flies kites” when he expands operations injudiciously; he “holds the market” when he prevents a decline in prices by buying heavily; he “milks the street” when he manipulates so skilfully that they rise or fall at his pleasure; he “unloads” when he sells the particular stock or commodity of which he is “long;” he “spills stock” when he offers large quantities with a view to lowering or “breaking” prices; if he is successful in these tactics he is said to “saddle the market.”

A “bear” is said to be “gunning” a stock when he employs all his energy and craft to “break” its price. He “covers,” or “covers his shorts,” when he buys to fulfill his contracts. He “sells out” a man by forcing prices down so that the latter is obliged to relinquish what he is “carrying,” perhaps to fail.

The nature of a “corner” has been already set forth in detail. The operator or clique organizing and managing it is said to “run” it. The day when final settlement must be made between the opposing parties engaged in such a transaction is termed “settling day.” If the “bears” are forced to settle at unusually high prices they are said to be “squeezed.” The “squeeze” which has followed many a corner has precipitated not a few wealthy men into financial ruin. This circumstance, however, is usually a matter of utter indifference to the manipulators. The success of a “corner” is sometimes prevented by what is known as a “squeal,” or revelation of the secrets of the pool or clique by one of its members. Sometimes the plans of the organizers of a “corner” are brought to naught by a “leak” in the pool, that is, by one of the members secretly selling out his holdings. Of course, a “corner” can be formed only on what is known as a “future,” or future delivery, by which is meant the sale and purchase of some stock or commodity to be delivered at some period in the future.

Yet another form of gambling very common upon the floors of stock and commercial exchanges is known as dealing in “puts,” “calls” and “straddles.” When a person buys a “put,” he pays a stipulated sum for the privilege of selling to the party to whom it is paid, a certain quantity of some particular stock or other article, within a fixed time, at a designated price. Thus A might pay to B one hundred dollars for the privilege of selling him one hundred shares of Union Pacific stock at a stipulated price, within ten days. As a matter of course, the price named is always a little below the current quotation ruling at the time the contract is made, _i. e._, the day upon which the “put” is bought. If, for instance, the “put” is sold at 80 cents on that day, and the market declines to 75, A might tender to B the one hundred shares, and the latter would be compelled to take them at that price. In such a case A would have gained five dollars per share, or five hundred dollars in all, provided he had “covered his shorts,” _i. e._, bought in the stock which he had already put, at the latter figure. As a matter of fact, neither party contemplated an actual delivery. The market having declined, A’s net gain is, of course, only four hundred dollars, he having already paid one hundred dollars to B. This appears an easy method of winning money. As a matter of fact, however, experience has shown that very few men win through the purchase of “puts” and “calls.”

A “call” is similar in its general nature to a “put,” but differs from it in that the buyer of the former has the privilege of calling or buying a certain quantity, under the same conditions. The seller of the “put” contracts to buy, and of the “call” to sell, whenever the demand is made.

A “straddle” is a combination of the “put” and the “call,” and is the option of either buying or selling. The cost of these “puts,” “calls,” and “straddles,” which are known as “privileges,” varies from one to five per cent. of the par value of the stock, or the market value of the commodity involved, and depends upon the time they have to run, the range covered, and the activity and sensitiveness of the market.

It is claimed in behalf of these privileges that they are, in their essence, really contracts of insurance, and as such are entirely legitimate. The general public, however, has always regarded them as a complex system of betting, and believes that they constitute one of the most pernicious features of the exchange. The fallacy of the argument in their favor, above outlined, becomes apparent when it is remembered that the law regards all contracts of insurance as being one form of gambling, and sanctions and enforces them only on grounds of public policy. The burden of proof is upon the defenders of “puts” and “calls” to show that, even if it be conceded that they are contracts of insurance, they can be justified as being necessary to the furtherance of commerce or the welfare of society. That they do not tend to promote commerce is shown by the fact that neither party to the transaction for a moment contemplates the actual delivery of the article bought or sold. It is essentially a wager between two individuals as to the future course of the market, one betting that prices will advance, and the other that they will decline. The absurdity of claiming that they promote the general welfare of society, (were such a claim advanced), may be easily demonstrated by calling attention to the economic consideration that the winner has done nothing to produce the money which he pockets, and by pointing to the pecuniary loss and moral debasement which they entail. They sustain somewhat of the same relation to the dealings of the large operators as does the keno room to the faro bank.

The legislature of Illinois, a few years ago, placed the seal of its condemnation upon the practice by making it a misdemeanor to deal in privileges. It is said (although the author is unable to vouch for the truth of the statement), that this virtuous action on the part of the lawmakers was due to the influence brought to bear upon them by a well- known member of the Chicago Board of Trade, who had been dealing extensively in “puts” and “calls,” and had lost heavily. However that may be, the Chicago Board, after permitting the practice for years, adopted a rule prohibiting their sale, and even went to the length of suspending a few members for its violation, among them being one of the most prominent operators upon the floor. This spasm of virtue, however, was not of long duration, and at the present time such privileges may be procured from members of that august body with the greatest ease.

The action of this great Western Exchange in the premises may possibly have been prompted by motives other than a desire to comply with the statutes. Long after the enactment of the law, privileges were sold as freely as before its passage. In time, however, it was found to be a two-edged sword. Operators found it possible to purchase “puts” for the purpose of buying against them, and to buy “calls” with a view to shield themselves from loss when they became “bears.” Thus an army of sellers appeared when the “call” price was reached, and a horde of buyers when the market touched the price at which “puts” had been sold, the consequence being that the range of the market was curtailed. Members objected to tactics which robbed the market of that elasticity so dear to the speculator’s heart. Carping critics say that the virtue of the directors was the outgrowth of disappointed self-seeking. In other words—speculation—the very life-blood of the exchange was being curtailed. _Hinc illae lachrymae._

But the action of the directors, as was soon found, rendered it possible for certain members, who were willing to incur the risk, to do a thriving business in privileges provided the transactions were secret. Of course firms desiring to obey the rules were at a disadvantage, and legitimate brokerage suffered. There was one obvious, logical conclusion: “Allow every one to engage in the business or no one.” This commended itself to common sense, and a carefully worded resolution was adopted, the practical effect of which, as every one understood it, was virtually to remove the ban from the sale of privileges. Since that time, “puts” and “calls” may be purchased with the same ease as one may pay his taxes.

But let us return to the methods employed in the manipulation of prices. Reference has been already made to the very common practice of attempting to “bull” or “bear” quotations by buying or selling large quantities, or “blocks” of some particular article. There is probably no description of market in the world so extremely sensitive as the commercial exchange. A sale or purchase of any given commodity by certain, well-known operators, is often sufficient to excite its pulse to fever heat. A similar result may ensue from a report that the Secretary of the Treasury contemplates a call of a certain denomination of bonds; that Bismarck had been heard to say that the French blood was too thin and needed a little more iron; that a norther in Texas had killed a herd of cattle; that a few grasshoppers had been seen in the neighborhood of Fargo; or that the mercury was believed to be about to fall in Northern Minnesota. The great speculators, the master minds of these gigantic institutions, are quick to perceive this sensitiveness, and equally prompt to avail themselves of it. Fictitious news is as potent an agency in advancing or depressing prices as is the genuine article, and it is a sad truth that there are not wanting large operators who do not scruple to employ it. It is said—and there is good reason to believe the statement to be true—that there are men at all great commercial centers whose only occupation is the dissemination of unfounded reports, with a view of raising or lowering the prices of certain commodities in regard to which the rise or fall of a fraction of a cent may mean the gain or loss of millions. These manufacturers of fictitious news are said to “wear purple and fine linen and fare sumptuously every day.” The results of their operations are to be found in the wrecking of important financial and corporate interests and the corresponding enrichment of the unprincipled manipulators who employ them.

Some years ago, there came a mysterious rumor to the New York Stock Exchange, that the directors of a certain railroad in the Northwest had decided upon taking a step which could not fail to prove disastrous in the extreme to the interests of the corporation. No one was able to tell just where the rumor originated, yet it found sufficient credence to depress the price of the road’s stock, and to induce free selling. The next day came the refutation of the story; the stock recovered its tone, and the clique in whose interest the lie had been sent over the wires reaped a profit of $60,000. In the slang of Wall Street this was called “a plum.” It is difficult to see the difference in moral turpitude between such tactics as these and “steering” for a “brace” faro bank.

An acquaintance of the author, who served with distinction during the late civil war, on his return home, was employed by a company owning alleged oil lands in Pennsylvania, to superintend the sinking of wells within its territory. The salary was liberal and the duties not arduous. Wells were duly sunk, but no oil discovered, after a time, the gentleman in question received instructions from the headquarters of the company in an Eastern city to telegraph, on a certain day, that a well recently sunk, was yielding a certain large number of barrels per day. This dispatch was to be followed, a day later, by one of similar tenor, making a like assertion in reference to another well. The party who gave these instructions well knew that a certain class of speculators on the exchanges are in the habit of discounting private information through the bribery of telegraph employees, and he placed no little reliance upon this fact for the furtherance of his scheme. The event proved that he had calculated wisely. The telegrams were duly sent and were read by other parties before they reached the man to whom they were addressed. The result was that the company’s stock bounded upward with the celerity of a rubber-ball, and the projectors of the enterprize unloaded at an enormous profit. Of course, the purchasers found out that they had been deceived, but as none of the officers of the corporation had disseminated the report of the finding of oil, it was impossible to attach any responsibility to them.

And yet there are not wanting those who affirm, and stoutly maintain, that without the commercial exchange, business would be brought to a stand-still, and commerce paralyzed; that Boards of Trade and Produce and Stock Exchanges are prime factors in advancing the welfare of the country. And this is said despite the fact that the percentage of legitimate business done is utterly insignificant in comparison with that which is purely speculative in its character. The sales of one agricultural product alone upon the floor of a single mart of this sort for one month alone have been known to equal the production of the entire country for a whole year! Is this legitimate commerce, or is it gambling on the wildest and most extensive scale? Members of various Boards in the United States who assume to do a strictly legitimate business, send out circulars through the rural districts, the sole object of which is to induce the recipients to speculate upon the floor of ’Change. These communications depict, in glowing terms, the ease and certainty with which ignorant countrymen may acquire fortunes in a day, through the purchase of a “put” or a “call,” or a “straddle.” They purport to explain, fully and clearly, the methods of speculating in stocks and grain, and represent the system as simple and easily comprehensible, while the authors know that the system is in itself complex and the issue a venture—at the very best—uncertain. It is not pretended that the transaction contemplates an actual transfer of the commodity from seller to buyer. Is this frank? Is it manly? Is it honest?

Scarcely a decade has passed since the whole country rung with the echoes of the “Fund W” scandal. Unquestionably the men who engineered that gigantic scheme of fraud were not representative members of any commercial exchange, yet it is equally certain that but for the facilities afforded for the perpetration of the fraud through the Exchanges’ methods of doing business, that stupendous swindle would have been impossible. Yet the infatuated speculators who do business through legitimate houses, believe that they can trust their own judgment as to the future of the market! It may be that such folly has its parallel, but it is not to be found in that of the man who stakes his money on the issuance of a particular card from a faro box.

Few of those who have never witnessed the daily routine of business on the floor of an Exchange can conceive the wild uproar, the hubbub, the confusion, the tumultuous excitement, which there reigns supreme. Let us take a glance at one of the best known. During the busy hours of the session the floor of the magnificently proportioned room is crowded. Scattered about at distances more or less regular, are large marble- topped tables, about which gather groups of men engaged in quiet, though sometimes earnest, conversation. These tables contain drawers, in which members, who pay well for the privilege, keep samples of the commodities in which they deal. Hurrying to and fro about the room may be seen brokers and their clerks, carrying in their hands small paper bags, containing samples of grain which has been consigned by growers or other shippers, for sale. Similar bags are strewed all over the tables. Everything indicates activity, and it is evident that important business is being transacted. The sound of the voices of the traders rising from the floor to the visitors’ gallery, joined to the clicking of the myriad of telegraphic instruments, reminds one of the ceaseless hum of bees around a hive, heard in midsummer, when the nodding clover and bending buckwheat invite the tireless workers to taste their sweets.

Such is the scene during the early hours, but as the morning advances the picture changes. In the center of the room are four octagonal “pits,” formed by short flights of steps which rise from the floor on the outside and again descend on the inside. In these so-called pits is carried on the heaviest business of the Exchange. One is devoted to the sale of wheat, another to corn, and a third to provisions, pork, lard, etc. Gradually, as the minutes and hours pass, they fill with an eager crowd of traders, which swells in numbers until the area itself and the steps leading to it, are literally jammed with an excited throng, yelling, gesticulating, waving their arms and shaking their fists in each other’s faces. The hum has risen to a surge, and to the onlooker in the gallery the scene seems to have been transformed into Bedlam or pandemonium. On the upper row of steps of one of the pits, men stand facing each other, forty feet apart. One raises his hand and makes what appear to be cabalistic signals to the other, who makes some other equally mysterious signs. Then each produces a card on which he makes an entry, and the dumb show is duplicated by others. To understand this pantomime, no less than the significance of these frenzied cries and frantic gyrations of arms and fingers requires an education of peculiar character, the education of the habitué of the floor. Each motion of the hand, each turn of a finger has its significance, representing the quantity of the particular commodity sold, and the price at which it is bought. These angry, dissonant voices, proceed from the hoarse throats of opposing factions, one trying to “bull” and the other to “bear” the market, and each striving to rival the other in clamor and persistency. No wonder that the excitement is intense. The entire wheat crop of the country is being sold before it is harvested, and much of it before it is planted, and on transactions of such magnitude a variation in price of even a fraction of a cent, means the gain to one and loss to another of tens of thousands of dollars. Fortunes are accumulated and sunk in an hour. One operator sees wealth within his grasp; another perceives bankruptcy staring him in the face. It is not strange that under such circumstances the strongest passions in the human breast should struggle for mastery, and find vent in expressions as wild as they are exaggerated.

Yet outside this howling, seething, surging crowd, within hailing distance from the center of all this hubbub (were language audible at a distance of thirty feet), sits a row of men, some of them in the prime of life, some of them scarcely past its meridian, others wearing the silver crown of age. Cool, collected, seemingly dispassionate, they exchange conversation which appears to be humorous, to judge from the laughter which it provokes. To the casual observer, they seem to be in the “madding crowd,” but not of it. Yet one who carefully watches their movements may see that from time to time signals are exchanged between some one or other of them and some individual on the steps of the pit. These men, thus sitting apart, are the great operators, those who make prices, and whose every movement is watched, as possibly affording a clue to their intentions. Jealously, however, do they guard their secrets; impassable are their countenances, and imperturbable their demeanor. With the seemingly stolid indifference of the veteran gamester, who sees his last dollar swept from the table by the turn of a card and gives no sign of regret, these men calmly witness the wiping out of a fortune by a rise or fall in prices, and manifest not the slightest indication of emotion.

To the visitor sitting aloft the spectacle is strange, bewildering, fascinating.

But let us descend to the floor, to enter upon which the stranger must obtain a card of admission. Here one passes men who have won largely, but whose countenances betray no symptom of exultation, and others whose losses have been heavy, yet whose laughing faces and merry jests indicate no dissatisfaction either with the world or with life. The busy operators at the telegraph key-board are too much absorbed in their work to give heed to the Babel of confusion around them. Messenger boys scurry hither and thither, in anxious quest of men for whom they bear tidings, perhaps of grave consequence. Suspended from various points about the room are charts, tables and diagrams, relating to almost every conceivable subject, the report and forecast of the Signal Service office; the supply of cereals at every market in the civilized world; the movement of breadstuffs and provisions at home and abroad; the cargoes of steam-ships from American, European and East Indian ports; comparative statements of receipts and shipments; and one thousand and one other matters, a knowledge of which may be of interest to members. On the front of one of the long galleries are huge dials, whose index fingers record the fluctuations of prices in the pit. On days when speculation runs riot and excitement is more than usually rampant, these pointers sway to and fro with a rapidity of movement almost bewildering.

But before we have satisfied our curiosity, or sufficiently indulged our admiration of the completeness of the mechanism of the gigantic machine whose revolutions we have been contemplating, the striking of the great gong indicates that the active business for the day in one of the world’s greatest marts has closed. To one who has regarded the transactions with the indifference of a chance spectator, this sound means little more than the tolling of the bell, which in some high tower marks the hour. But on more than one listening ear upon the floor it falls like the knell of doom. To many a venturesome speculator who has unfortunately placed himself upon the wrong side of the market, it is ominous of a crisis in his affairs which must be promptly met if he is not to be overtaken by ruin, perhaps by disgrace. He must become a borrower, or be publicly posted as being unable to meet his contracts. Perhaps he has already overstrained his credit, and knows that his commercial paper must go to protest. Who can surmise all the varied feelings which the sound of that gong awakens in the breasts of not a few of those who hear it? Yet no sign of emotion is visible in the vast throng of brokers and their principals as they descend the broad marble staircase or hurry to the elevators. They laugh, smoke and chat as though they were returning from a merrymaking, rather than from a gathering where millions of money had been staked, and where, perchance, some of them had sold their honor for a mess of pottage.

The charter powers bestowed upon some of these commercial corporations is enormous, rivalling those conferred upon courts of law. Thus, the charter of the Chicago Board of Trade contains the following provision: