The public does not realize, and probably never will realize, that it is the court of last resort in all important financial operations. It is its custom to regard itself as helpless, at the mercy of shrewd financiers and unscrupulous speculators. If it could only once get it into its head that it holds the key to the situation in its own hands and that without its money the large financial interests could of themselves do little or nothing, and if, in addition to this, it would take a little pains to inform itself as to actual facts, figures and values, very much less money would be lost in Wall Street and a great many enterprises would never be undertaken. Stocks and bonds are never sold until they are sold to the public. Manipulators may move prices up and down on the Exchange and may make fictitious transactions to an enormous extent, but unless the public comes with its money and buys the securities, the work is unavailing.

Of course, it is not fair to suggest that the generally bullish character of financial comment at all times is the result of prearranged plans in behalf of the large financial interests as against the public. The hopeful and even the optimistic side of things is necessarily the more popular of the two sides. Moreover, as a rule, the conditions that make for higher prices of securities are conditions favorable to the business world and to the public. Consequently it is pleasanter to look at the cheerful side of things than at the other side. Nevertheless, it is perhaps true to say that, on the whole, there is somewhat too much of this kind of thing and too little of its opposite. Only too often it has happened that the public has been pretty

generally encouraged up to the last minute, and when trouble has come and the public's money has been lost, the only consolation that it gets is usually in the form of a mild scolding for not having foreseen the trouble before it came.

A healthy skepticism is seldom out of place in Wall Street, so far as speculation is concerned. Money is very seldom lost thereby. People who have had experience covering one or two panics know very well that the first lesson that has to be learned by the successful speculator is the avoidance of the disaster always caused by a panic. The very essence of a panic is that it sweeps away every one who is overtrading-whether it be to a large or to a small extent. Of what use is it to pile up imposing paper profits if they are all to be swept away when the tidal wave strikes? The only way whereby people can avoid being caught in a panic is by the exercise at all times of great conservatism and considerable skepticism. The successful speculator must be content at times to ignore probably two out of every three apparent opportunities to make money, and must know how to sell and take his profits when the "bull" chorus is loudest. When he has learned that much, he has learned a great deal.

CHAPTER XXI.

THE PHYSICAL POSITION OF THE STOCK SPECULATOR.

It is a habit with some active speculators to attribute their own lack of success to advantages of physical position; that is to say, the outside trader believes that the member of the Exchange is in a relatively more advantageous position to make money. The broker is "on the spot," and is in such close relationship to the market that he commands greater opportunities and less risk than the outsider, according to the latter's conclusion, which is not always true. As a fact, however, they occupy distinctly different positions and employ radically different methods, although having the same object, viz., money making.

It is reasonable to hold that the member of the Exchange who trades for his own account, occupies a rela-. tionship to the market which gives him substantial advantages-independent of commissions-as compared with his position were he an outside trader, located in New York, Chicago or elsewhere.

As an illustration we can use the case of a young Chicago Hebrew, who had been graduated from Harvard, and who selected stock trading as a vocation. His father, a successful trader, was in complete sympathy with his ambition. The young man started to trade in the New York Stock Exchange market over a Chicago wire. He lost

money. He figured that as a trader he was handicapped by certain conditions which he could eliminate. His view was that he lost several minutes in the transmission of the quotations from the floor of the Exchange over the ticker, more time in the transmission of the quotations from New York to Chicago, additional time in their distribution throughout that city and fresh delay in the transmission of his order to New York, thence to the Exchange, and in its execution. Although the machinery required in the processes enumerated has been perfected in a high degree and narrowed down to seconds, the trader who sought to make “quick turns" undoubtedly clearly comprehended the disadvantages or handicaps under which he labored.

He therefore left Chicago for New York, and traded from the office of a Stock Exchange house, alternately watching and studying the ticker or the blackboard quotations as his fancy dictated. The real or imagined advantages did not result in substantial profits and after a fair trial of trading from the outside he bought a Stock Exchange membership and became a daily trader. He was now free to roam as he pleased, study the habits and methods of individual brokers and groups of brokers in the execution of orders, the tricks of the trade, the relative value of gossip designed to make fluctuations. His early speculations were by no means entirely successful; parental assistance being required to help the young trader carry a block of stock with which he became entangled in a brief period of great mental excitement.

At the expiration of a year, however, the trader had become a practical money maker who derived his livelihood

from daily hazards in the stock market. He is, as might be expected, of the opinion that as an active trader he is free from disadvantages with which the outsider has to contend.

But it may be held that not all traders may become members of the Stock Exchange and that to become a "trader-broker" requires qualities of temperament not always to be found in successful speculators who are not Exchange members. And the outsider may hold that, given capable brokers, a quiet office, a ticker and the news of the day, and his advantages will more than offset those of the Exchange member. In the first place he will prefer a quiet office to the babel of voices and confusion of the Exchange floor. Absolute quiet may be to him a foremost consideration. Secondly, he sits alongside the ticker from which position he can study purchases and sales, supply and demand and market tones, factors that call for careful study by the professional trader. The time lost in the execution of his order he regards as more than offset by the condition which enables him to calmly read the tape and draw rapid conclusions as to the significance of the transactions so quickly printed.

Yet another consideration is that which comes from trading in an office receiving good market gossip, calculated to influence prices. Thus one office may possess very substantial advantages over another. It may be represented on the floor by brokers clever enough to keep the office informed of the Board Room gossip and news; it may possess superior sources of news information, such as newspaper financial writers occupying desk room therein.