Evening Republican, Volume 14, Number 27, Rensselaer, Jasper County, 1 February 1910 — SPECULATING ON MARGIN. [ARTICLE]

SPECULATING ON MARGIN.

Aiurrii-an and KnxlUh AVnja of Oninu; It Are Very Different. hi America a speculator's capital (with an exception to be noted below) is necessarily*at least the size of his margin in his broker's hands, though it is to be feared that in only too .many instances it is just this and nothing more. On the London stock exchange another method prevails w'hich, says Moody's Magazine, it is probable has bone more in the long-ago past to give stock speculation its bad name than ail the episodes, of an unsavory nature which have ever occurred on American exchanges. In London after the inevitable Introduction to a broker the new customer gives his order, but makes no deposit at all. The broker is supposed to learn something of his new client’s means and how far he should be allowed to commit himself. Twice a month the English have what they call their settlement days. A customer long of a stock whose commitment has gone somewhat against hi.m is then required to pay the differences, as they are called, between his purchaste price and the current quotation. He must also pay a charge called a contango for holding the settlement over into the next fortnightly period if he does not wish to close the commitment. As a consequence of this way of doing business a speculator may he trading on a few points margin in reality, or in fact on no margin at all: he may be utterly penniless without his broker's knowing ir. That this method works out with fewer losses in England that it would do here is due to the fact that the social and economic strata to which an Englishman belongs are much easier to determine than the corresponding facts among us, and also that an ’n-

{reduction means more there than here, as the introducer is regarded as to a certain extent responsible morally for the business deportment of his fblend. , . ' ..^— L —__ it is worth whjle observing ../and this is the exception referred to above) that in certain instances the methods pursued in American stock exchange houses are the same as those obtaining iu London. Little as the fact is. known, it is not ad unfrequerit custom for very wealthy speculators to Have no fixed margin o'r even no margin at ai! with their brokers. If a man of this sort loses on a commitment he sends hi 3 broker a check for the loss; if he wins his brokers remit to him for his gains. The broker dislikes to offend a very powerful client by troubling him for funds and hepce takes risks with his accgunt which he would not dream of taking with the account of smaller men. Instances of this sort sometimes become public in cases where tlie broker is forced into bankrupted whether owing to this cause or not.