"Bucket shops do business on a very different principle. They neither buy nor sell the stocks upon orders given to them by their customers, and in very many instances they make no pretence of assuming to do this, nor do their customers have any idea that their "orders" to buy and sell are obeyed. Both parties to the operation look upon it in its true light of a simple bet made that a stock quoted upon the New York Exchange will go up or down within certain limits. The commission charged by the bucket shop keeper is much less than that of a Stock Exchange firm. The bucket shop man is willing to deal in very small lots of stock, accepting very small margins. He charges his customer no interest for the money which, if the business was done in the usual way, would have to be borrowed to pay for the stocks actually purchased. Moreover, the bucket shop keeper allows his customer to begin or close his trade at a definitive quotation as it appears upon the ticker of the Stock Exchange operations, and he closes the customer's account instantly upon the exhaustion of the margin, so that the customer is assured that no further claim is to be made upon him in case the market still continues to go against him. The bucket shop keeper however, for his part, often declines to allow an accumulated profit in certain stocks to run beyond a certain figure. and he generally is willing to deal in but small lots of stock. His whole system of doing business is one which presents very great inducements to the small speculator, and if these inducements could be offered by any responsible house having a membership in the Stock Exchange, that house would very soon have a monopoly of speculative

operations conducted by the outside public in Wall Street. "Where, then, does the bucket shop keeper make his money? In this simply, that, as his operations are, in reality, those of a series of bets with his customers, the bets, so far as the customers are concerned, taking the form of guesses as to which way the stock market will go, experience has demonstrated that such guesses of the general run of people are in the main incorrect and that there is a steady, average profit to be had in miscellaneously accepting, or as the slang of Wall Street has it, 'coppering' them. As most of the outsiders are lambs,' as they are called in Wall Street, they buy stocks, rather than sell them, so that the customers of bucket shops find their greatest profit and the keeper of the concern his greatest loss, in periods of prosperity and advancing markets such as we have just seen. Then if the bucket shop man is a dishonest individual, as he usually is, he finds it convenient to fail at the proper time, sweeping into his own pockets all the margins and paper profits of his patrons. Many of these patrons, indeed, are very far from being innocent and unsuspecting lambs. They have no illusions on the score of the game they are playing, and they know that the bucket shop keeper is probably a pretty 'crooked' person. They are apt to belong to that unhappy class of individuals known as the 'ghosts' of Wall Street, that is, men who once did business there on a large scale, but have lost the money they won and are forced to gamble, if they gamble at all in a very humble way. The question, on which these men concentrate most of their attention is the possibility of the bucket shop failing, and after a pro

longed 'bull' market when they know that the proprietor of the concern is probably losing heavily, they take their profits in cash, if they have any, and beware the shop as a very dangerous locality.

"It is very clear, therefore, that the business of trying to speculate by means of bucket shops is an extremely hazardous thing. If man feels he must speculate, he ought to become a customer of a house having membership in the Stock or Consolidated Exchanges. And it is still as true as it ever was that the best way to make money is not to speculate at all."

CHAPTER XXV.

THE SPECULATOR AND THE CONSOLIDATED EXCHANGE.

The speculator should have a clear idea of the Consolidated Exchange, its advantages and disadvantages and relation to the Stock Exchange. This is necessary inasmuch as the Consolidated Exchange has at times afforded a market for many thousand small speculators in stocks, particularly those living out of town. The Consolidated Exchange is generally advertised as the "N. Y. Con. Stock Exchange." It is a consolidation of a mining exchange and an oil exchange. In the '70's and '80's it was the scene of violent speculation in mining stocks, and certificates representing crude oil in lots of 1,000 barrels. Accompanying the decline of speculation in mining shares and oil certificates, the members decided to trade in the active stocks dealt in on the Stock Exchange. To-day the trading in mining shares is on a nominal basis only, while the pipe line certificate as a speculative factor has been entirely eliminated, hence the name New York Consolidated Stock and Petroleum Exchange is a misnomer, and the substitution of the assumed title-"N. Y. Con. Stock Exchange." Almost the entire floor of the Consolidated Exchange is now devoted to dealing in Stock Exchange shares. In the main, the dealings are confined to fractured lots; in fact the bulk of the trading is in 10 share

iots. Certain members of the Consolidated Exchange are accustomed to say that their Board is the "primary market" for speculation in fractional lots. This is not so. The Stock Exchange is the primary market for the sale of each and every stock dealt in thereon. On its quotations, questions before courts of law are decided and its prices are recognized as official in any legal dispute involving the price of 1 share or its multiple. Then again, inasmuch, as it is impossible to deal on the Consolidated Exchange in many inactive stocks listed on the Stock Exchange, the limitations of such a market obviously make the claim to a "primary market" absurd. And again, it is possible to conceive of the complete elimination of the Consolidated Exchange, without thereby affecting investors, speculators, or those corporate interests which have listed their securities on the Stock Exchange after compliance with the rules of the latter institution.

Whether the Consolidated Exchange is or is not a useful public institution are questions which will not be answered here. Membership on the Consolidated Exchange is nominally quoted at $2,500. Stock Exchange memberships (in 1902) commanded $83,000. The disparity in values is also calculated to cheapen the "primary market" claim. In connection with the Consolidated Exchange there have been many scandalous failures in which credulous investors have in the aggregate been robbed of a large amount of money. Bucket shops have secured representation in the institution, and the later-day management has not yet been able to overcome the corruption which was fostered in the early '90's.