GLOSSARY OF BOARD OF TRADE TERMS
BEAR: One who believes the conditions are ripe for a decline in prices, or one who desires such an event. One may believe that the price of a certain security is about to decline and therefore is said to be a bear on that particular security, whereas he may not be so on others. The natural attitude of a bear is that of a seller but he may be so for the sake of buying at a lower price later.
BEARING THE MARKET: An artificial lowering or forcing down of prices.
BID PRICE: The price offered or bid for any security or commodity.
BORROWING STOCK: A broker borrows stock when he has made a contract to deliver and the stock which he has sold, for any one of various reasons cannot be delivered at the time agreed.
BREAK IN THE MARKET: A sudden and considerable decline in price.
BROKEN LOT: Same as odd lot in reference to stocks and less than ten thousand dollars par value in bonds.
BUCKET SHOPS: Offices run by irresponsible brokers not members of any stock exchange and who do a marginal business upon one dollar per share and upwards. As a matter of fact the stock itself is neither purchased nor sold for the customer by these operators. If the order is actually executed upon a bonâ fide exchange then the bucket shop puts in a contrary order for a like amount. For example: This kind of a dealer would sell an amount equivalent to a customer's purchase or purchase an amount equivalent to a customer's sale, thus, in no event carrying stocks.
BULL: One who believes that conditions are ripe for an advance in prices or one who desires such an advance and talks bullish in consequence. One writer defines a bull as a man who has something to sell, consequently he is anxiously waiting for prices to go up that he may sell at a good price.
BUY AT MARKET: An order to buy at the lowest prices at which the security can be obtained without any price limit being set by the one giving the order.
BUYER'S OPTION: A contract under the terms of which the buyer of a security need not receive delivery until the end of a specified time, but he has the right to demand delivery at any time within the period covered by the contract by giving the seller one day's notice. The understanding is briefly expressed as "buyer 4," "buyer 10," the figures indicating the number of days provided for in the agreement.
BUYING ORDER: An order given to a broker to buy a certain security with or without limit as to price as the case may be. An order to buy is good for the date for which it was given only, unless otherwise specified. Sometimes an order is given "until countermanded" or "until cancelled" by which the broker understands that there is no definite limit as to time; but brokers usually remind their customers regarding orders to be sure that they still desire them to be kept in force.
CABLES: Telegrams from foreign countries on the conditions of the market. Large brokers receive cables each morning from London, Paris, and other points giving closing prices of grain and provision in that market.
CALL: A privilege which one party buys of another to call (receive) from him a certain amount of stocks, grain, etc., at a certain price and date.
CARRYING CHARGES: The interest charged by brokers for the amount of money advanced by them to customers in marginal transactions; also used by a Chicago firm to indicate storage rates, interest, and insurance on grain or provisions.
CASH GRAIN: Grain for delivery at once. Spot grain has the same meaning.
COMMISSIONS: The charge made by any broker for buying or selling securities for someone else.
CURB: Securities which are not traded in upon the large stock exchanges or new securities which have not yet been listed upon such exchanges are handled in what is known as the curb market. The reason for the existence of "curb market" in the open rather than in some building is that if the latter plan were pursued there would, in truth, exist another exchange, and it would not be permissible for a member of the regular exchange of the same city to be represented thereon as he frequently now is upon the curb.
CURBSTONE BROKER: One who usually, not being a member of the stock exchange, goes from office to office or transacts his business on the curb.
DELIVERY: The actual turning over to the buyer of the thing bought. If delivery is offered after hours, the buyer may refuse it until the following business day, but the seller has no right to demand interest for extended time.
DIVIDEND: A portion of the profit of a corporation authorized by the board of directors to be paid to the stockholders.
DUMP: An amount of stock that is forced upon the market for the purpose of getting rid of it. It does not mean so much the disposing of an undesirable investment but in offering any investment in large amounts.
EVEN: A broker is even on stock when he has contracted to receive and deliver equal amounts of the same stock with another broker. A settlement of the difference in prices is the only thing called for.
FLURRY: A small panic. An excitement caused by a rapidly falling market and advancing money rates.
FUTURES: Buying or selling grain for future delivery. Literally speaking when you buy grain in February which is known as May grain you contract for delivery in May at prices then existing.
IN SIGHT: The amount of grain, coffee, cotton, tobacco, or any commodity available for immediate use.
LIMIT: A price which a broker must not exceed in executing an order for his customers. It may also be a restriction of the amount to be purchased or sold.
LISTED SECURITIES: Securities before they can be listed upon any board of trade or stock exchange must have complied with certain rules of the exchange. This does not imply that listed stock has any greater intrinsic merit than unlisted stock but it merely shows that certain facts and figures in relation to the security have been given more or less publicity.
LONG: One who holds stock or grain for a rise in price, or, one who has a contract under which he can demand such stock or grain on or before a certain day. The opposite of short.
MARGIN: An amount of money deposited with the broker to insure him against loss; a part of the purchase or selling price.
O: The "Ticker" abbreviation for offered when accompanied by figures; for instance, "G. N. O. 76" would mean that Great Northern Common Stock was offered at $76.00 per share.
OPEN MARKET: A market where any or all may buy or sell.
OPEN ORDER: An order which is good until cancelled.
OPTION: An agreement of purchase or sale, good only for a certain time.
PIT: The portion of the board of trade where floor trades are made. This term is particularly applied to Chicago. Other stock exchanges set aside certain places signified by posts set in the floor for trading and in these exchanges the trading points are called posts instead of pits.
POOL: A combination of buyers who work together and invest their joint capital as one. (The different boards of trade have enacted strict rules against pooling.)
PUT: A privilege which one party buys of another to put (deliver) to him a certain amount of stock, grain, etc., at a certain price and date.
PUT AND CALL: A put and a call may be combined in one instrument, the holder of which may either buy or sell as he chooses at a fixed price and date.
REMARGIN: To give more margin.
RING: A combination of brokers to offset and settle trades with each other; also an exclusive combination of persons for a selfish purpose as, to control the market. (Rings have the same standing in the board of trade as pooling, if of the same character.)
SELL AT MARKET: An order to one's broker giving authority to sell stock or grain at market price.
SELL AT OPENING: An order to sell immediately after the opening of the stock exchange at the best price obtainable.
SELLING ORDER: An order given to a broker to sell a certain security with or without limit as to price, as the case may be. A selling order is good for the day for which it is given only unless otherwise specified.
SETTLEMENT: The payment of differences in trades between brokers.
SHORT: One who has sold for future delivery what he does not own, but hopes to buy at a lower rate.
SKYROCKETING: Pushing the prices of securities up to unnatural levels or forcing the price up with startling rapidity.
SLUMP: A sudden and a considerable fall in prices.
SPREAD: A "put and call" at differing prices.
STOP LOSS ORDER: This is a method of limiting losses by giving a stop order to the broker to sell if stock declines below a certain point. These are sometimes called stock orders.
STRADDLE: A "put and a call."
SWEETEN: To give more collateral or margin.
TICKER: A small printing machine operated by telegraph by which the outside world obtains the reliable information as to the prices of securities and commodities dealt in upon the principal exchanges of the world. It is a never failing source of information to the broker. The results are printed on a strip of paper like a ribbon which automatically unwinds and after passing under the printing device runs into a basket. The ribbon is called the tape. All fluctuations in prices are thus wired to the principal exchanges immediately.
WASH SALE: An illegitimate or fictitious transaction.
THE WHOLESALE HOUSE OF MARSHALL FIELD & CO., CHICAGO, ILL.
BILLING AND ORDER RECORDING[[5]]
Introduction. The survival of the fittest applies most forcefully to business men and their methods. The success of the men depends upon their methods; the efficiency of the methods, upon the men. Large corporations of to-day would be impossible without method. They plan their work, and method tells them daily whether they are working their plan successfully or unsuccessfully.
[5]. Copyright, 1909, by American School of Correspondence.
It is commonly supposed by the smaller business men that method is a result of business growth. Sometimes it is. If a business grows fast, better methods become a necessity. Without method any business must remain small—with few exceptions, just as small as the capacity of the man at the helm. "To the extent which system is intelligently used, it multiplies one's powers of achievement in all directions."
The importance of the order billing and shipping departments, the amount of waste effort therein, and the relation of each to all other branches of the business, make them a most interesting and profitable study for the progressive business student, whether he be a beginner, an executive, or an owner. To attain quick results and to eliminate useless head, hand, and leg work, learn the capacity, capability, and usefulness of office machinery and the short-cut methods made possible thereby.
During the last eight years there has been a tremendous amount of improvement made both in this country and abroad in handling office work, changing from hand to machine methods. Most of these improvements have been literally forced upon the business men of the country by specialty companies having labor-saving devices for sale. Wide-awake merchants have in some cases left the installation of such devices to office people who feared the loss of their positions through the use of them.
One of the pioneers in the development of the class of work above mentioned is Hiram J. Halle, who overcame all obstacles, and gave the impetus to modern billing methods which has been such a help to our economic results in office practice. The typewriter companies have followed his lead and equipped cylinder machines with the necessary attachments for accomplishing almost any desired result, except writing in a bound book. In order to overcome this obstacle, the McMillan and the Empire and some other loose-leaf books have been invented. These books are loose-leaf only while they are being written upon; after completion they are permanently bound by a simple device, and become as secure as a sewed book.
In any book of this character, the student must consider the text as a series of problems, with explanations of how each has been solved. If the student does not learn to exercise his own powers of originality as a result of a study of this volume, he will fail to secure the result intended. Rarely, if ever, will two problems be met in two commercial establishments which will be alike. The judgment of the person installing the system will determine the best method to be used under certain conditions.
Before starting in on the regular work, it will not be out of place to give a comparison of the methods of business in various foreign countries.
The rush in the business life of the United States is accounted for by our fast growth and national desire to accumulate wealth. Commercial concerns have grown both fast and slowly to undreamed proportions. Strenuous efforts have been made to secure business, and then a corresponding effort has been made to effect the small economies which in a large business aggregate large sums. As a nation, we are rushing at headlong speed, seeking all the means which will give us results. In transportation we advance from steam to electricity; in social life we turn from horses and carriages to automobiles; in commercial life we use every known device to short-cut the work and effect economies—adding machines, typewriters, cash registers, envelope openers, envelope sealers, multigraphs, etc.
A distinct surprise awaits the person visiting Europe on a mission of introducing "short-cut" methods. While we are in business to make all the money we can, most of the Europeans are in business to make a living, or reasonable earnings.
Imagine the surprise of the writer when told by the managing director of one of the largest department stores in London that they did not care to save the services of thirty-five clerks (which was possible by modern methods) as they were making a certain amount of money each year, and did not care to make any more; besides, they did not wish to put these people out of positions. It is not an easy matter to secure positions in England. Employes are very diligent and pay strict attention to business. A manager of one of the large banks in London said that once a clerk is hired he is discharged for gross misconduct only—not even for incompetency. There are young men clerks (pronounced clarks) in the Bank of England who are doing the same work for the bank as done by their grandfathers. There are old men in the Bank of England to-day who still use quill pens and the sand box instead of a blotter. There are, however, adding machines being used there by the younger generation, and they are of more use to them than to us in a way, as their currency is so much more difficult to add.
Each year, more improved methods are being introduced into England. Typewriters have been used for a number of years, and of late years adding machines have made headway. It is more difficult there to introduce new methods, but, once installed, it is difficult to dislodge them for other ones.
Some of the wholesale houses have very old methods. In one house in London, an order was copied twenty-nine times from the time it was received until it was finally charged. The concern was over two hundred years old and had never made any effort to improve its methods. It had four boys whose duty it was to hunt orders lost about the warerooms. A system of manifolding was installed, which eliminated so much waste of time in copying and recopying orders that it was difficult to convince the firm that something had not been overlooked. After four weeks they were delighted.
An American going abroad is much impressed by the deliberation of Europeans and is inclined to criticise them for it. After a time, they can point out enough Americans who have worn out at forty years of age, and are in Europe seeking health, to convince them that perhaps the Europeans are not wholly wrong.
In Germany, the railroads are controlled by the government. When one attempts to introduce short-cut methods, he is confronted by the fact that work is needed to keep busy old soldiers for whom the government has to care. In asking an agent of an American firm dealing in labor-saving devices why he did not use any of the devices, the answer was given that in Germany the young men work three years for nothing; he did not feel the necessity of doing away with any of them. At the end of three years' work in an office, a young man receives a diploma for efficiency, if he has attained it. The government exercises a strict supervision over all commercial concerns, and inspects their books at periodic intervals. Commercial failures are therefore more rare there than at home. Fraudulent schemes are dealt with severely.
There are many large firms in Germany, both jobbers and manufacturers, that are striving to be progressive. The Siemens-Halske Electric Co. are just as progressive in their order and billing methods as any American firm in the same line. To show the attention to details given by the Germans—a managing director of one of the large department stores in Berlin, when asked how long he had lived in the United States, said he had never been there. Upon being complimented upon his American accent, he replied that when talking to an American he always used the American accent, slang, intonation, etc., and when talking to an Englishman he changed his accent, etc., to correspond. He had all the American devices in his accounting department which one would find in any department store in the United States, and sent out monthly typewritten bills the same as John Wanamaker, Altman, and others of New York, and the same as all large department stores do in all American cities.
In France, the commercial houses are very conservative and are subject to the same government supervision as practiced in Germany. In one of the railroad companies, the Chemin de fer du Nord, they use the manibill system of billing (whereby each shipment is billed separately and manifolded on a form of seven sheets) which is the shortest form of billing known, but which has never been adopted by American railroads on account of the bulk of papers increasing too rapidly. The present American method is to put several shipments on a way bill for shipments to any given town, and when the goods arrive at the given town, the receiving stations make out separate freight bills for each shipment, copying the information from the blanket way bill made out at the forwarding station. Some of the American railroads are now adopting the special roll machine for car accountants' work, as shown in Fig. 1.
Fig. 1. Underwood Special Roll Machine for Car Accountants' Work
The French people do not, as a rule, form large companies like the Americans and Germans and English. There are a large number of small manufacturers and jobbers in France. The large department stores, like the Louvre, in Paris, are run on a strictly cash basis.