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Conclusions of a Speculator

Chapter XXVIII.
Successful and Unsuccessful Speculators

Chapter XXIX.
An Interesting Inquiry .

Chapter XXX.
Stock Market Manipulation

Chapter XXXI.
The Record of Five Panics

Chapter XXXII.
End of Several " Booms"

Chapter XXXIII.
Dealing in Unissued Stocks

Chapter XXXIV.
The Tipster's Point of View

Chapter XXXV.

Wall Street Points of View

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THE A B C OF STOCK SPECULATION

CHAPTER I.

Origin Op Stock Brokers, Stock Exchanges And Stock Speculation.

Etymological authorities are not in entire accord respecting the origin of the word "Broker." Jacob's Law Dictionary says: "The etymology of the term Broker has been variously given. By some it has been derived from the Saxon broc, misfortune, as denoting a broken trader; the occupation being formerly confined, it is said, to unfortunate persons of that description (Tomlins). According to others it was formed from the French broieur, a grinder or breaker into small pieces; a Broker being one who beats or draws a bargain into particulars (Termes de la Ley, Cowell). The law Latin from obrocator, however, seems to point distinctly to the Saxon abroecan (to break), as the true root, which in the old word abbrochment (q. v.) or abroachment, had the sense of breaking up goods or selling at retail. A Broker, therefore, would seem to have been originally a retailer, and hence we find the old word auctionarius (q. v.) used in both these senses (Barrill's Law Diet., tit. "Broker"). Wharton gives, as the derivation of the word the French broceur, and the Latin tritor, a person who breaks into small pieces (Whar. Law Diet.,

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tit. "Broker"). Webster gives as its derivation, the old English brocour, Norman French broggour, French brocanieur. Under the word "broke," to deal in second hand goods, to be a Broker, Webster says it is probably derived from the word brock. Worcester derives it from the Anglo-Saxon brucan, to discharge an office; brocian, to oppress; and the French broyer, to grind. See "Broke" and "Broker." The word "Broker" seems first to occur in literature in Pier's Ploughman, "Among burgeises have I be Dwellyng at London. And gart Backbiting be a brocour. To blame men's ware." It clearly means here a fault finder, as in Provencal brae is refuse. The Broker was originally one who inspected goods and rejected what was below the standard (Wedgwood). Crabb's Dig. of Stat., tit. "Brokers," 261, says, "There were a class of persons known to the Komans who were deemed public officers, and who united the functions of bankers, exchangers, Brokers, commissioners and notaries all in one under the description of proxe netae."

As early as 1285, in England, the term Broker occurs in an Act of Parliament. It enacts that "there shall be no Broker in the city (London), except those who are admitted and sworn before the warden, mayor or aldermen."

John B. Dos Passos, an authority on stock exchange law, says: "The next statute passed in the reign of James the First, more than 300 years later (1604) regulates the calling of Brokers with greater detail than the first act and clearly shows, by the use of the words 'merchandise and wares' that down to this period the Broker in money, stock, and funds had no legal existence. . . It was not until the latter part of the seventeenth century, when the East India Company came prominently before the public, that trading or speculating in stock became an established business in England; and the term 'Broker,' which had then a well-understood meaning was promptly transferred to those persons who were employed to buy or sell stocks or shares, and who thenceforth became known as 'stock-brokers.'"

In 1697 owing to the "unjust practices and designs" of Brokers and Stock-jobbers in selling tallies, bank stock, bank bills, shares and interest in joint stock, a stringent act was passed permitting only sworn appointees to act as Brokers. In the reigns of William Ill., Anne and George, statutes were passed regulating the practice and trade of Brokers.

An early legal writer describing Stockbrokers, said: "Stockbrokers are persons who confine their transactions to the buying and selling of property in the public funds and other securities for money, and they are employed by the proprietors or holders of the said securities. Of late years, owing to the prodigious increase of the funded debt of the nation, commonly called the stock, they are become a very numerous and considerable body, and have built by subscription, a room near the Bank, wherein they meet to transact business with their principals, and with each other; and to prepare and settle their proceedings before they go to the transfer-offices at the Bank, the South Sea and India houses, thereby preventing a great deal of confusion at the public offices, where the concourse of people is so great during the hours of transferring stock that if the business was not prepared beforehand it would be impossible to transact it within the given time."

The advantage of having a Broker as an intermediary was recognized by merchants many centuries ago. A sixteenth century writer on the law says: "It is an old proverb, and very true, that between what you will buy? and what you will sell? there is twenty in the hundred differing in the price, which is the cause that all the nations do more effect to sell their commodities with reputation by means of Brokers than we do; for that which seems to be gotten thereby is more than double lost another way. Besides, that by that course many differences are prevented which arise between man and man in their bargains or verbal contracts; for the testimony of a sworn Broker and his book together is sufficient to end the same."

Dealings in Stock certificates constitute the main business of Stock-brokers, but the origin of stock certificates has not been satisfactorily traced beyond the middle of the seventeenth century. Property in this form was not known to the ancient law. While mercantile or commercial corporations existed among the Romans, history gives us no information regarding their character or methods of conduct.

Ang. & Ames on Corporations (10th ed.) Ch. 18, Sec. 26, says: "A Collegium Mercatorum existed at Rome 493 B. C, but the modern bourse from the Latin bursa, a purse, originated about the fifteenth century. Bourges and Amsterdam contend for the honor of having erected the first bourse."

"The Roman law," says John R. Dos Passos, "required

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