Lights and Shadows of New York Life

J >> James D. McCabe >> Lights and Shadows of New York Life

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There are two daily sessions of the Board, one in the morning and the
other in the afternoon. The securities offered at these meetings are
divided into two classes, the Regular and the Free List. No stock or
bond can be dealt in until it has been rigidly examined by a committee,
and found to be a _bona fide_ security.

At half-past ten o'clock in the morning, the Morning Board is called to
order by the First Vice-President. The Regular List, which is made up in
advance of the meeting, must always be called, and called first. The
Free List may be called or not at the option of the Board. The Regular
List consists of 1st. Miscellaneous Stocks. 2d. Railroad Stocks. 3d.
State Bonds. 4th. City Stocks. 5th. Railroad Bonds.

The session opens with the reading of the minutes of the previous day.
Then comes the call of the Regular List. The call of Miscellaneous
Stocks awakens but little excitement. Bids follow quickly upon the
announcement of the stocks, and the transactions, as they are announced
by the cries of the brokers are repeated by the Vice-President to the
Assistant Secretary, who records them in the journal, and they are also
recorded by a clerk on a black board in full view of the members. Where
there is a doubt respecting a sale or purchase the Vice-President
decides, and his decision is final, unless reversed by the votes of a
majority of the members present.

[Picture: THE NEW YORK STOCK EXCHANGE BOARD IN SESSION.]

The call of railroad securities brings the brokers to their feet, and the
real business of the day begins. Offers and bids, shouted in deep bass,
high treble, or shrill falsetto, resound through the hall, and in a few
minutes the jovial-looking brokers seem to be on the verge of madness.
How they yell and shout, and stamp, and gesticulate. The roar and
confusion are bewildering to a stranger, but the keen, practised ears of
the Vice-President at once recognize the various transactions, and down
they go in the Secretary's book, and on the black board, while the
solemn-vizaged telegraph operator sends them clicking into every broker's
office in the city. High over all rings the voice of Peter, the keeper
of the gate, calling out members for whom telegrams or visitors have
arrived.

The other stocks awaken more or less excitement, and when the Regular
List is completed, the Free List is in order, and the Vice-President
calls such stocks as the members express a desire to deal in. Then,
unless there is a wish to call up some stock hastily passed over on the
call of the Regular List, the session closes.

At one o'clock, the afternoon session is held, and the routine of the
morning is gone over again. The transactions of both sessions are
carefully recorded in the Secretary's books.

The Vice-President receives a salary of $7000 per annum for his services,
which are not light. The Secretary and Assistant Secretary, and
Roll-keeper do the rest of the work of the Board. The last named keeps a
record of the fines, which yield an exceedingly large revenue to the
Board. The brokers are not the most dignified of mortals in their
meetings, but are very much given to disorderly conduct and practical
jokes. The annual dues of the Exchange are but fifty dollars, but the
average broker pays at least ten times as much in fines. To interrupt
the presiding officer during a call of the stocks subjects the offender
to a fine of not less than twenty-five cents for each offence; to smoke a
cigar within the Exchange costs five dollars; to be absent from special
meetings is to incur a fine of not more than five dollars; to stand on a
table or chair is punishable with a fine of one dollar; to throw a paper
dart or ball at a member during the session of the Board costs ten
dollars; and other offences may be punished with fines assessed by the
Vice-President at any sum between twenty-five cents and five dollars.

Each day a list of stocks to be put in the market is made out, and no
others can be sold during the sessions. The Board can refuse to offer
any particular stock for sale, and a guarantee is required of the party
making the sale. The members of the Board are men of character, and
their transactions are fair and open. They are required to fulfil all
contracts in good faith, however great the loss to themselves, on pain of
expulsion from the Board, and it is very rare that an expelled member can
be reinstated.

III. THE GOVERNMENT BOARD.

The room used by the Government Board, in which all transactions in the
bonds and securities of the United States take place, is located on the
second floor of the Exchange building. It is handsomely frescoed and
furnished in green rep. The basement beneath this room is an immense
vault, containing 618 safes, arranged in three tiers, and guarded by four
policemen detailed for that purpose. These safes are a foot and a half
square, and are rented by the brokers who deposit in them overnight small
tin boxes containing their bonds and other securities. It is estimated
that the value of the securities nightly deposited here is over two
hundred millions of dollars.

The seats of the brokers in the Government Room are arranged in tiers,
rising one above the other, from the floor to the wall. The officers
occupy a platform at the head of the chamber. The order of business is
very much like that of the Stock Board.

"The Vice-President begins:

"'6s '81 registered--'81 coupon. 5.20s '62 registered--coupon. What's
bid?'

"Here and there from flanking chairs come sputtering bids or offers:

"'Ten thousand at 3/8, buyer 3.'

"'I'll give an 1/8, seller 3, for the lot.'

"'0.25, buyer 30, for fifty thousand.'

"'0.25, regular, for any part of five thousand.'

"_First Voice_. 'Sold,--five hundred.'

"The presiding officer repeats the sale and terms, the secretary makes
his registry, and a new bond is started.

"Sometimes when 5.20s are called, there is at first only one voice which
rings the changes on 'I'll give 115. I'll give '15 for a thousand,--'15
for a thousand.' Presently, however, before any response follows the
offer, a member in a distant corner, either carelessly or maliciously,
shouts out, 'I'll give '14 for a thousand,--'14 for a thousand.'

"The Vice-President plies his hammer: 'Fine Irving--fine Irving fifty
cents.' The Roll keeper proceeds to make his little note of it, and
Irving, who has violated the rule, founded on common sense, which forbids
a member from making a bid below or an offer above the one which has the
floor immediately subsides amid the laughter of his neighbors.

"Occasionally an interruption of a grosser character occurs, a member
leaping from his seat on some slight provocation, and striking off the
hat of the man who has offended. Fine Harrison, fine Harrison again,
_fine_, FINE him again,--FINE Harrison,' cries the Vice-President,
repeating the word without cessation until the broker's wrath has been
appeased, and he returns to his chair with the disagreeable reflection
that a heavy score is against him for the semi-annual settlement-day.
Every repetition of that fatal monosyllable was a fresh mark of fifty
cents or a dollar against his name. Generally, however, the Government
brokers are more orderly than their neighbors in the Regular Board.
Indeed, the whole proceedings are more decorous and respectful, the
bidding, half the time, being carried on in a low conversational tone.
At second call there is a brief excitement, but when 'things are dull'
throughout the street, this room peculiarly reflects the external
influences.

"Very different it is, however, on days when some special cause provokes
great fluctuations. Then the members spring from their seats, arms,
hands, excitable faces, rapid vociferations, all come in play, and the
element of pantomime performs its part in assisting the human voice as
naturally as among the Italians of Syracuse. To the uninitiated the
biddings here are as unintelligible as elsewhere, sounding to ordinary
ears like the gibberish of Victor Hugo's Compachinos. But the
comparative quietude of this Board renders it easier to follow the course
of the market, to detect the shades of difference in the running offers,
and generally to get a clearer conception of this part of the machinery
of stock brokerage."

In former times brokers were subjected to great expense in keeping a host
of runners and messengers to bring them news of the transactions at the
Exchanges. The introduction of the Stock Telegraph has made a great and
beneficial change in this respect. In every broker's office, and in the
principal hotels and restaurants of the city, there is an automatic
recording instrument connected by telegraphic wires with an instrument in
the Stock and Gold Exchanges. The operator in these exchanges indicates
the quotations of stocks and gold on his own instrument, and these
quotations are repeated by the instruments in the offices throughout the
city. These office instruments print the quotations in plain Roman
letters and figures on a ribbon of paper, so that any one can read and
understand them. Thus one man does the work formerly required of several
hundred, and no time is lost in conveying the information. The broker in
his office is informed of the transactions at the Exchange at the very
instant they are made.

IV. THE GOLD EXCHANGE.

You pass from Broad street into the basement of a brown stone building
just below the Stock Exchange, and find yourself in a long, dimly-lighted
passage way, which leads into a small courtyard. Before you is a steep
stairway leading to a narrow and dirty entry. At the end of this entry
is a gloomy looking door. Pass through it, and you are in the famous
Gold Exchange.

This is a showy apartment in the style of an amphitheatre, with an ugly
fountain in the centre of the floor. An iron railing encloses the
fountain. Against the New street end is the platform occupied by the
President and Secretary, and on the right of this is the telegraph
office. There are two galleries connected with the room, one for the use
of visitors provided with tickets, and the other free to all comers.
There is an indicator on the outer wall of the building on New street,
from which the price of gold is announced to the crowd without. It is a
common habit with sporting men of the lower class to frequent New street
and bet on the indicator.

There are but few benches in the Gold Room. The members of the Board are
too nervous and excitable to sit still, and seats would soon be broken to
pieces in their wild rushing up and down the floor.

The business of the day begins about ten o'clock. The rap of the
President's gavel opens the session, and as there is but one thing dealt
in--gold--the bids follow the sound of the mallet. The noise and
confusion are greater here than in the Stock Board or the Long Room, and
it seems impossible to a stranger that the President should be able to
follow the various transactions. When the excitement is at its height,
the scene resembles "pandemonium broken loose." The members rush wildly
about, without any apparent aim. They stamp, yell, shake their arms,
heads, and bodies violently, and almost trample each other to death in
their frenzied struggles. Men who in private life excite the admiration
of their friends by the repose and dignity of their manner, here join in
the furious whirl, and seem more like maniacs than sensible human beings.
And yet every yell, every gesture, is fraught with the most momentous
consequences. These seeming maniacs have a method in their madness, and
are changing at every breath the value of the currency upon which the
whole business of the country rests. When the fluctuations are very
great, fortunes are made and lost here every hour.

Connected with the business of the Gold Room are the Gold Exchange Bank
and the Clearing House. The method of settlement with these
institutions, which are indispensable where gold passes so rapidly from
hand to hand in the Exchange, is as follows: "On or before half past
twelve o'clock, a statement of all the purchases or sales made by each
broker on the preceding day must be rendered to the bank. If the gold
bought be in excess of that sold, a check for the difference must
accompany the statement. If deposits in gold or currency are not kept in
the bank, the coin must be delivered at every deficiency. The Board
adjourns at twelve, in order to enable tardy dealers to complete their
accounts. Provided all contracts are honored, the bank must settle by
two P.M. In case of default, the amount in abeyance is debited or
credited to the broker who suffers by the failure."

The Clearing House Association was created in 1853, and represents the
sum of the financial business of the city. "The Association is located
in the third story of the building of the Bank of New York. The centre
of the room is occupied by a bank counter, extending on four sides, with
a passage inside and out. Fifty-nine desks are placed on the counter for
the use of the fifty-nine banks represented in the Association. Each
desk bears the name of the bank to which it belongs. Fitted up in each
desk are fifty-nine pigeon holes for the checks of the various banks.
Two clerks represent each bank. One remains at the desk and receives all
the checks on his bank. He signs the name of the bank to the sheet which
each outside clerk holds in his hand. These outside clerks go from desk
to desk and leave the checks received the day before, with the banks on
which they are drawn. Banks do not begin public business till ten; but
clerks have to be on hand at eight, when all checks are assorted and
arranged for delivery at the Clearing House.

"At ten minutes before ten the bank messengers begin to assemble and take
their places. As they enter they leave with the messenger a slip
containing an exact account of the bank they represent. These statements
are put on a sheet prepared for that purpose, and must conform precisely
to the checks received inside, before the Clearing House closes its
duties. If there is any error or discrepancy, the bank is immediately
notified by telegraph, and the clerks kept until the matter is
satisfactorily adjusted. At ten, promptly, business begins. Clerks come
rushing in with small trunks, tin boxes, or with bundles in their arms,
and take their seats at the desks. On the side of the room entered only
from the manager's office is a desk, not unlike a pulpit. Precisely at
ten the bell rings, the manager steps into his box, brings down his
gavel, and the work of the day begins. Quiet prevails. No loud talking
is allowed, and no confusion. A bank late is fined two dollars; a party
violating the rules, or guilty of insubordination, is fined two dollars
and reported to the hank. On repetition, he is expelled the Clearing
House. The daily transactions of the Clearing House varies from
ninety-eight to one hundred millions. The system is so nicely balanced
that three millions daily settle the difference. Each bank indebted to
the Clearing House must send in its check before half after one.
Creditors get the Clearing House check at the same hour. Daily business
is squared and all accounts closed at half after three. Every bank in
the city is connected with the Clearing House by telegraph. The morning
work of clearing one hundred millions, occupies ten minutes. Long before
the clerks can reach the bank, its officers are acquainted with the exact
state of their account, and know what loans to grant or refuse. Through
the Clearing House each bank is connected with every other in the city.
If a doubtful check is presented, if paper to be negotiated is not
exactly clear, while the party offering the paper or check is entertained
by some member of the bank, the telegraph is making minute inquiries
about his financial standing. Before the conference closes, the bank
knows the exact facts of the case."

V. CURB-STONE BROKERS.

The members of the Stock and Gold Exchange, as has been stated, are men
of character. Their transactions are governed by certain fixed rules,
and they are required, on pain of expulsion from the Exchange, to observe
the strictest good faith in their dealings with each other and with their
customers. If the operations of the street were entirely confined to
them, business in Wall street might be regarded as in safe hands. But
there is another class, even more numerous and quite as well skilled in
the ways of the street, who transact a vast part of its business. They
are not members of the Exchange, and in former times used to assemble
around its doors in Broad and New streets, and carry on their operations
on the sidewalk. Hence their designation, "Curb-stone brokers." They no
longer assemble on the pavement, for the Exchange has thrown open to them
its Long Room. Any one who can pay $50 a year for a ticket of admission,
and who has brains and nerve enough to enter upon the struggle, can sell
or buy in the Long Room. This is better than standing in the street,
exposed to the weather, and moreover gives a certain respectability to
the "operator," although he may carry his sole capital in his head, and
his office in his breeches-pocket.

No rules or regulations apply to the Long Room. The honest man and the
rogue mingle together here, and the broker must be sure of his man. Many
of the members of the Exchange buy and sell here, either in person or
through their representatives, and many good men who are unable to enter
the Exchange conduct their business here. Others again prefer the
freedom and the wider field of the Long Room. Still, there are many
sharpers here, who would fleece a victim out of his last cent.

The daily transactions of the Long Room are said to average about
$70,000,000, or ten times the business done in the Regular Board.
Fortune is much more uncertain here than in the room up stairs. Men buy
and sell here with the recklessness of gamblers. The noise and
excitement are almost as great as in the Gold Room. The absence of the
fixed laws of the Regular Boards puts every one on his own resources, and
men are compelled to use all their ingenuity, all their determination to
guard against a surprise or unfair dealing. It is every one for himself
here. A dozen or more small or new operators are ruined and swept away
daily, and in times of great financial excitement the Long Room shakes
the foundations of even some of the strongest houses in the street.

VI. THE BUSINESS OF THE STREET.

It is a common habit to speak of Wall street as the financial centre of
the Republic; but only those who are acquainted with its transactions can
know how true this is. Regarding Wall street and New York as synonymous
terms, we find that the street is not only a great power in this country,
but that it is one of the great controlling powers of the financial
world. Indeed, if the prosperity of the country is as marked in the
future as it has been in the past, there is good reason to believe that
Wall street will control the whole world of finance. Its geographical
location is in its favor. By noon the New York broker has full
information of the same day's transactions in London, Frankfort, and
Paris, and can shape his course in accordance with this knowledge, while
the European broker cannot profit by his knowledge of matters in New York
until the next day.

The Stock Exchange of New York numbers over 1000 members, and its
aggregate wealth is greater than that of any similar association in the
world. The par value of the annual sales made at the regular Boards and
"over the counter" is estimated at over $22,000,000,000 annually. The
par value of the authorized stocks, bonds, and Governments dealt in by
the regular Boards is more than $3,000,000,000, and this vast sum is
turned over and over many times during the year. The aggregate of the
brokers' commissions on the sales and purchases made by them is estimated
by competent authority at $43,750,000 annually. The bulk of this
enormous business is in the hands of about 400 houses.

"Out of all the incorporated banks in the United States, there are thirty
situated in Wall street and its neighborhood, whose office is not unlike
that of the heart in the economy of animal life. Although less than half
the full number of banks in the metropolis, these thirty have two-thirds
of the capital, and quite two-thirds of the circulation. By a provision
of statutory law, all outside National banks, numbering some 1600, are
allowed to keep one-half, and many three-fifths, of their reserve
balances in New York. In this way our great financial centre is rapidly
acquiring the function of a National clearing-house. These temporary
deposits bear a small interest, and are subject to be called for at a
day's notice. They can only be used, therefore, by the employing banks
on the same conditions. The stock market supplies these conditions.
Bonds and shares bought to-day and sold to-morrow, endowed with all the
properties of swift conversion, and held by men whose training has been
one of incessant grappling with the new and unexpected, are the only
class of property upon which money can safely be borrowed without a
protection against sudden demands. On these securities, therefore, the
down-town banks make call loans. The name implies the nature. The money
which the thirty receive from without, together with their own reserves,
is lent freely to stock-brokers, with the simple provision that it must
be returned immediately upon notice, if financial exigencies require it.
This vast volume of what may well be styled fluid wealth is difficult of
estimate in figures. The published statements of loans made by city
banks make no distinction between discounts of commercial paper and what
is advanced on securities. In sum total, the thirty banks lend weekly
about $165,000,000. Indeed, including all New York banks, the average is
nearly $255,000,000. During the week ending September 18, 1868, these
banks lent $266,496,024. The real meaning of these last figures will be
better understood when it is known that they exceed the entire average
loans and discounts of all the national banks of New England and New York
State, with the exception, of course, of the city itself. Or, to take a
more sweeping view, they surpass the total weekly loans of national banks
in Maryland, Virginia, North Carolina, South Carolina, West Virginia,
Georgia, Alabama, Texas, Arkansas, Kentucky, Tennessee, Ohio, Nebraska,
Kansas, Missouri, Minnesota, Iowa, Wisconsin, Illinois, Michigan,
Indiana, Delaware, and New Jersey. Nigh $180,000,000 of the amount cited
above were advanced by the down-town banks. What proportion of this was
lent on stocks? Probably much over one-third. As many of the other
banks also make call loans, we may, perhaps, estimate that from
$70,000,000 to $100,000,000 are furnished daily to the brokers and
operators of New York.

[Picture: THE PARK BANK, BROADWAY.]

"This, however, is but one element in the lending force of the city.
There are five Trust Companies, with capitals amounting in the aggregate
to $5,500,000, which lend, at times, $60,000,000 a week. There are also
a large number of private banking houses, of which Jay Cooke & Co. may be
selected as representatives, that daily loan vast sums of money on
security. The foreign houses alone, which, like Belmont & Co., Brown
Brothers, Drexel, Winthrop & Co., operate in Wall street, employ not much
less than $200,000,000 of capital."

VII. STOCK GAMBLING.

In the good old days gone by Wall street did business on principles very
different from those which prevail there now. Then there was a holy
horror in all hearts of speculation. Irresponsible men might indulge in
it, and so incur the censure of the more respectable, but established
houses confined themselves to a legitimate and regular business. They
bought and sold on commission, and were satisfied with their earnings.
Even now, indeed, the best houses profess to do simply a commission
business, leaving the risk to the customer, but those who know the hidden
ways of the street hint that there is not a house in it but has its
secrets of large or small operations undertaken on account of the firm.
The practice of buying and selling on commission is unquestionably the
safest, but the mania for wealth leads many clear, cool-headed men into
the feverish whirl of speculation, and keeps them there until they have
realized their wildest hopes, or are ruined.

It has been remarked that the men who do business in Wall street have a
prematurely old look, and that they die at a comparatively early age.
This is not strange. They live too fast. Their bodies and brains are
taxed too severely to last long. They pass their days in a state of
great excitement. Every little fluctuation of the market elates or
depresses them to an extent greater than they think. At night they are
either planning the next day's campaign, or are hard at work at the
hotels. On Sundays their minds are still on their business, and some are
laboring in their offices, screened from public observation. Body and
mind are worked too hard, and are given no rest.