One side of the rotunda—the great inner Hall of the “Bolza”—is therefore now tenanted by the dealers in stocks and shares, and the other, facing it, by those occupied with grain. Each exchange has two large blackboards on which prices are chalked up by attendants as deals are called by the parties making them. These prices then become official; and their genuineness is vouched by the fact of their having been called by members of the Exchange, who are held responsible by the Committee for the bona fides of these announcements.
The rules are now very strict on the question of calling of bona fide dealings only. At one time the announcement and consequent chalking up of fictitious deals (called “gatos,” or, as we might say, “wild cats”) became so scandalously frequent and unblushing that a stop had to be put to a malpractice which deceived the public, since all prices chalked up are published in the daily papers.
The first, usually, in regard to both the magnitude and importance of the dealings recorded on it, of these blackboards or “slates,” as they are called, is that reserved for transactions in Government and other important stocks; the second being that devoted to shares.
Thus the first board is mostly filled with records of the numbers and prices of National Cedulas dealt in, and the second with those of whatever one or two kinds of shares may for the time being be in fashion for what one may bluntly call gambling. For gambling, simply, is the end of almost everything in the shape of speculation in the ephemerally chosen media. It is in regard to this gambling that the note of warning to the stranger already sounded may be repeated here. The really Argentine public has long ago had its fingers sufficiently often and severely burnt to have decided to give all Bolza speculation a wide berth. And here one is brought face to face with a mystery which the present writer has as yet been wholly unable to explain in any fully satisfactory way.
This mystery is that, given the fact that the contributions of the public to Bolza gambling have since long ago become a negligible quantity, it seems clear that such speculation must be confined to a limited group of Bolza operators.
How, therefore, is it worth the while of any of these operators to survive for long as such? They are mostly, if not all, men of small capital, very small in many cases, yet there they are, day after day, busily occupied in attributing usually fictitious values to the shares of one, or at most two (for the time being) companies. Up go the prices of such shares, rising each day to giddier heights, till at last like balloons they disappear from sight and another set of shares takes their place as material for a boom. Who is the last man or men left with shares at top price? And what on earth does he do with them? These be questions the answers to which are hidden by a secrecy the completeness and continuity of which do credit to the initiate few whose common interest it is to maintain it.
The only protection of these people is a mutual defence against the common enemy, similar to that adopted by professional buyers at an ordinary auction against any innocent amateur who may stray into their midst. On the other hand, the mere presence of a known “bear” among these folk, completely paralyses all action on their part until his back is turned again. The writer now has in his mind’s eye a well-known figure, that of a powerful bear who was the terror of the speculative markets in the golden days when the public still played the game and all went merrily except for his malevolent influence. He alone could frown all prices down; and he once held them down against the whole of the furious remainder of the Exchange. It was a never-to-be-forgotten conflict, from which he emerged victorious and with a name at which even the puny bulls of to-day still tremble. Though be it said, he now does little but lend money to those whom circumstances, or still, occasionally, he himself, have forced to carry over. Few Bolza members will fail to identify him from even this slight reference to his fame. The heyday of the Buenos Stock Exchange was that immediately preceding the passing of the “Conversion” law which fixed a ratio between gold and paper and thus ended the speculation in gold which had grown all too vigorous on wide fluctuations. After that, wild cats, resorted to as the next best stimulant, quickly undermined the constitution of the Bolza and frightened the public; permanently, it would still seem, from its precincts as far as gambling speculation is concerned. Such speculation, in any magnitude, has been dead since 1906; in consequence of the collapse at that time of a gold fever boom of which a shoal of doomed alluvial dredging Companies were part cause and part effect.
Nowadays, the real business, of which there is a large and constant volume, done on the Buenos Aires Stock Exchange is in National “Cedulas.” This business has gradually gravitated into the hands of a few large brokers. The only drawback to these Bonds is their name, which might lead the ignorant in matters South American to confuse them with the Provincial (Province of Buenos Aires) Cedulas, the corrupt mismanagement of which caused a great scandal some years ago. Still “Cedula” means a “Bond,” and it would, after all, be idle to wish to abolish the latter word only because some English Bonds may have proved unworthy of the prestige usually attaching to that designation.
The question has often been raised as to whether, on the wording of the guarantee endorsed on National Cedulas, the National Government is responsible for repayment of the principal as well as the interest on them. This, however, amounts almost to a quibble; of little, if any, more than abstract interest. The amortization of these Bonds is certainly guaranteed in like manner as is the interest on them, and only some tremendous crisis, now unimaginable, could so wreck the whole territory of the Republic that land values throughout that territory would simultaneously fall to an extent which could render impossible the redemption of mortgages granted in the first place with a very liberal margin between the actual market value of the land and the amounts of the Bonds issued on its security. For, it should be noted in this connection, a Cedula is not issued by the Bank on the Security of such or such designated property, it is issued on the security, guaranteed by the Bank after due investigation, of all the mortgages held by it. So that, in effect, even if the whole of a Province were to be engulfed by an earthquake, the security of none of the Bank’s Cedulas would be affected by the loss since, at the margin reserved by the Bank, all the remainder of the lands on which it holds mortgages would still be ample security for all its bonds.
The reader who is already well acquainted with these matters must forgive me for thus setting them out in so obvious a way. I ask him to believe that there are still very many holders of Argentine National Cedulas possessed of only the vaguest ideas of how their Bonds came into existence, and practically none as to the real nature of the security for them, except a general sort of notion that they are Argentine Government Bonds.