These clerks are not permitted to go on the floor. Their employers, who rent the telephones from the Exchange, pay $50 annually to the institution as a fee for each clerk. As their duties are extremely important, involving the transmission by ’phone of orders and reports that often run into millions, it will be seen that this small army of private line operators is of necessity highly trained. An instant’s relaxation or inattention, or a failure to transmit promptly and correctly the verbal messages entrusted to them, may conceivably lead to confusion and losses of great importance.
At each of the sixteen posts in the room, from twenty to forty stocks are situated, and another group covers the north wall. Once a position is assigned to any security by the committee in charge, it is seldom moved elsewhere, and thus, although there are nearly six hundred different issues of securities, the broker soon learns the location of each one and turns automatically in that direction when an order reaches him. At each of the posts, and along the north wall, the specialists in these various groups of stocks are at work before the opening of the market, entering the day’s orders in their books, some with the rapid energy that betokens an active opening, others with an indifference that spells dulness in their particular line.
At Post 4, in the northeast corner, there is also an ante-market gathering, for this is the spot where stocks and money are borrowed and loaned. This “loan crowd,” as it is called, was formerly the gathering to which one turned to gauge the market position of the bear party, since the borrowing of stocks by “shorts,” as done here, furnished an index of the strength or weakness of that interesting element. But of late it has lost its ancient prestige as a guide in such matters, because in order to hide the information sought, borrowing of stocks on a large scale is now done privately. This “crowd” has been the scene of some tremendous excitement, as in the Northern Pacific corner of May 9, 1901, when the price soared to $1000 per share and the shorts were trapped, and on that day in October, 1907, when money, after loaning at 125 per cent., was not to be had, for a time, at any price, although brokers with the best collateral would have paid 200 or 300 per cent. for accommodation, and ruin stared every one in the face.
As the hour of ten draws near, activities increase. On the south wall the arbitrageurs are busy deciphering their code messages and distributing orders, many hundred telephone bells are ringing in the long booths where clerks are hastily writing their messages; crowds of visitors gather in the gallery, while beneath it the bond-brokers prepare for their labors; indicator boards on the north and south walls, like great kaleidoscopes, display and hide their number with the same electric suddenness that seems to characterize everything and everybody—then bang! the gong rings, the chairman’s gavel falls, and another day begins. Yesterday is embalmed with the Pharaohs; they never speak here of what has happened, but only of what will happen—and this is a new day.
Naturally, certain securities are more active than others, and here there are the largest crowds. As the limits surrounding the trading-posts are but vaguely defined, one crowd will sometimes get mixed up with another, whereupon confusion results, and good-natured if earnest appeals are heard to “get out,” and “get over.” Into one of these struggling masses a broker with an order or a trader with an inspiration literally hurls himself; each sound in the jargon of voices, which means only Bedlam and Babel to the visitor, is to him perfectly understood. He may be pushed this way and that, or tossed aside, or hidden altogether by bigger men who surround him, yet he has no difficulty in determining the price and in doing what he came there to do; all this with surprising celerity and accuracy. The business done, he hastens to his telephone, makes his report, and is ready for the next order. The manner in which some of these transactions take place between brokers has long been a subject of praise. A word, or a nod, or an upraised finger, or a tap on the arm, and hundreds of thousands of dollars change hands without a scrap of writing or a witness. A magazine writer thus describes it:
One pastime of the American public is the manly sport of throwing mud. A shovelful of scandalous mud—a clean white target, and many a reputable and disreputable citizen is having the time of his life. We bespatter our philanthropists, our statesmen, merchants, lawyers, and divines. We vilify our art, our architecture (I take a hand in that sometimes myself), our literature, or anything else about which some one has spoken a good word.
One of the time-honored institutions of our land—one which has never ceased to be the centre of abuse—is the New York Stock Exchange. Here conspiracies are organized for robbing the poor and grinding the rich; so despicable and damnable that Society is appalled. Here plots are hatched which will eventually destroy the nation, and here the Gold Barons defraud the innocent and the unwary, by stock issues based solely on hot air and diluted water. Here Senators are made, Congressmen debauched, and judges instructed—even plans consummated for the seduction and capture of the Supreme Court. All this is true—absolutely true—you have only to read the daily papers to be convinced of it.
There is one thing, however, which you will not find in the daily papers. It is not sufficiently interesting to the average reader who needs his hourly thrill; and this one thing is the unimpeachable, clear, limpid honesty of its members.
When you buy a house even if both parties sign, the agreement is worthless unless you put up one American dollar and get the other fellow’s receipt for it in writing. If you buy a horse or a cow, or anything else of value, the same precaution is necessary. So too if you sign a will. Your own word is not good enough. You must get two others to sign with you before the Surrogate is satisfied.
None of this in the Stock Exchange. A wink, or two fingers held up, is enough. Often in the thick of the fight when the floor of the Exchange is a howling mob, when frenzied brokers shout themselves hoarse and stocks are going up and down by leaps and bounds, and ruin or fortune is measured by minutes, the lifting of a man’s hand over the heads of the crowd is all that binds the bargain.
What may have happened in the half hour’s interim, before the buyer and seller can compare and confirm, makes no difference in the bargain. It may be ruin—possibly is—to one or the other, but there is no crawling—no equivocation—no saying you didn’t understand, or “I was waving to the man behind you.” Just this plain, straight, unvarnished truth, “Yes, that’s right—send it in.”
If it be ruin, the loser empties out on the table everything he has in his pockets; everything he has in his bank; all his houses, lots, and securities—often his wife’s jewels, and pays 30, 40, or 70 per cent., as the case may be.
What he has saved from the wreck are his integrity and his good name. In this salvage lies the respect with which his fellows hold him.
Every hand is now held out. He has stood the test, he has made good. Let him have swerved by a hair’s breadth and his career in the Street would have been ended.[98]
Of course mistakes and misunderstandings do sometimes occur, and these are the banes of the broker’s life. He will lose $500 with equanimity on a personal venture, but he will howl in distress over a loss of $25 on a mistake, and apply to himself a lurid mosaic of epithets because of it. The one merely shows bad judgment and is one of the little amenities; the other he feels is stupidity. At such times the stockbroker adopts Talleyrand’s bold hyperbole when he heard of the death of the Duc d’Enghien, “It is worse than a crime; it is a blunder.”
When a “mix-up” occurs in a crowd, as when four or five men make claim to having supplied a bid simultaneously, everybody produces a coin and “matches” on the instant. It is a case of “odd man wins,” and no time to lose. The market may be active and differences of seconds may spell losses of thousands. In less time than it takes to tell it, everything is adjusted and forgotten. But sometimes a mistake occurs which is not discovered by either party until after the market has closed. A man may think he sold 500 shares, for example, whereas the buyer has only 400 on his book. In a case of this sort, the discrepancy is covered “at the market” next morning and the loss or profit is divided. Differences between members are seldom irreconcilable, and when they assume serious proportions any third man will act as arbiter and speedily settle them. It is a significant fact that the Committee of Governors selected to arbitrate disputes is rarely called upon. Rarely, too, is there acrimony or hard feeling. The use of epithets is forbidden; to call a man a liar means prompt suspension. And so they live on raw nerves, with incidents occurring daily that add to the strain, yet ever with good-humored acquiescence toward whatever fortune deals out to them, and with generous camaraderie one to another.
As the day advances on ’Change, news and gossip and rumors of all kinds pour in, and to these the active broker must devote a large part of his time. It is astonishing to what extent the public, or that part of it that lingers in brokerage offices, calls for news from the floor. The demand is insatiable. “What do you see over there?” “Who is buying Steel?” “Who is selling Union?” “What’s the news in Copper?” “What do you think of the market?” These are the messages that come over the wires all day long, not merely from the New York offices, but from Montreal, Boston, Chicago, St. Louis, and many other points. And no matter how busy the floor broker may be, time must be found, somehow, to reply to every question as best he may, for at the other end of the line there is a customer waiting to hear from him.
Just why this customer yearns for news from the floor has always been a mystery to me. What does he expect to learn? What value attaches to a list of names of brokers who buy or sell Steel, when everybody knows that really important principals in these matters invariably hide their hands? All the significant news of the day is printed on the news tickers and reaches the customer’s eye before the broker or the floor knows anything about it, yet never an hour passes but he is importuned to “say something” about what is happening on ’Change, although half the time nothing whatever is happening. The climax of this sort of thing is reached when the floor man is asked to predict the future course of the market, a request that reaches him a dozen times a day. Now, in the name of common sense, what does he know about whether the market is going up or down? How can a man who is swimming with the current tell how fast he is going? If he were a seer who could foretell such things he would have all the money in Wall Street, in which case he wouldn’t remain a broker very long.