holdings have been disposed of. These pools are seldom formed for other than speculative purposes, and seldom have the money to buy all the stock for which they contract outright. They generally operate with a stock of medium issue, rather than one of either very large or very small issue, as in one case the stock would probably be too scattered and it would require too much money, while in the other their design, on account of the limited issue, would become apparent at an early stage, and their object defeated.

A pool is generally managed by one of its members, who has absolute power over the holdings of the others, which are pooled and under his control. As a complete record is kept of all bonds and stocks of every corporation on its books, and while, of course, the entries of transfer do not always show the real owners, still a thoroughly posted operator can approximately determine what portion of its securities are held for investment and what are being actively dealt in on the exchange, and for ordinary purposes only the latter portion need be considered. Both the bulls and the shorts will do whatever they can to influence the market in their respective favors.

A bear pool is formed and controlled in the same manner, usually by persons short of a particular stock, who sell stocks, not in their possession, for future delivery and by their constant offerings to sell, seek to reduce the price so that they may be enabled to buy at a lower price than the price at which the stock has been sold. Inasmuch as they have to keep selling to depress the market while they are buying to fill their maturing contracts, as it would never do to have all the contracts mature at the same time, it requires most adroit management, as they must, in order to be successful, sell on the market which they have themselves lowered, and are compelled to keep on hand a much larger amount than they buy in order to make the pool a success.

Note Brokers.

This is the name usually given to men whose business is procuring the discount of commercial paper, notes. For various reasons there are comparatively few men engaged in this department of finance as compared with the other departments; and their dealings are largely restricted to what are known as outside borrowers, borrowers residing outside of the place where the loan is sought, or who desire accommodation from other than their usual banks or lenders, because most business men whose credit is good can nearly always secure all the money they need from the different banks in which they keep their accounts, and it is only when a man wants to go beyond this that he puts his paper in the hands of brokers, who usually simply procure its discount by some one else, but sometimes they buy the paper themselves, and either hold it or re-discount it at a lower rate.

As a rule, however, they are simply middlemen between the borrowers and the lenders, and receive a certain commission from the borrower for procuring the discount.

People who have no regular line of accommodation at one or more banks, or who have exhausted that line and wish to place their notes somewhere else, should consult the note broker.

Puts and Calls.

These words are so technical in their meaning as to require special explanation, which is best given by a statement of the method by which this business is transacted. Thus: A sells his agreement to B for a certain sum to "put" to him at a given day at the price named in such agreement a stated number of shares of a particular stock, giving B the privilege of calling for the delivery at the time and price agreed upon.

If the stock in the meantime goes down so that A can purchase the same for a less price than the price at which

he agreed to deliver it, B either pays A the difference between the price at which the stock shall be delivered and the price at which the same can be purchased in the market or receives the stock and pays therefor the price agreed upon. In the event of the stock going up, A either delivers to B the stock at the agreed time or price or pays to B the difference between the price at which he agreed to deliver the stock and its market price.

CHAPTER X.

Exchanges-New York Stock Exchange.

Exchanges. Exchanges are meeting-places for persons engaged in the buying and selling or exchanging of commodities or values, or the titles to such commodities or values.

The exchanges of the present day may differ in degree but not in kind from the guilds of the Saxons, and the meeting-places of the early merchants. Their growth has been so gradual and imperceptible, keeping pace with commerce, but never outstripping it, as to have occasioned. but little comment historically; and while we are informed that they were a well established part of the commercial life of the Florentine period, and gradually crept northward as the centre of commerce changed from Southern to Western Europe, still in all the essentials they existed, so soon as a large number of persons met with any regularity at a specified place to exchange their goods.

To the merchant or broker the exchange occupies in one sense the same relation as the merchant or distributing agent does to the producer and consumer. It is the medium through which he is brought in contact with those who desire to sell, and those who wish to buy, and he can consequently either sell or buy as he wishes. The exchange saves him the trouble and loss of time necessary to ascertain the person with whom he may exchange, just

as the country merchant saves the farmer the trouble of finding a purchaser for his wheat or cotton; and as the country storekeeper brings the manufacturer and the farmer together, so the exchange brings the different merchants together.

To realize the enormous saving of time and money and the economizing of energy effected by these institutions, let us for a minute suppose the business of a great community conducted without them, and each seller groping around for a buyer, and the buyer searching for a seller. Such a condition would be wholly incompatible with the life of our century.

All of our cities, even the smaller ones, have their Boards of Trade, and exchanges for the principal commodity dealt in, and even our villages have what to them answers the same purpose, some common meeting-place for buyers and sellers.

The relative importance of the different exchanges is usually determined by the sales, and naturally in different sections and cities different exchanges become more or less important than in others. Thus, in New York, the Stock Exchange is the most important exchange, owing to the enormous transactions annually effected, while in Western cities exchanges for the sale of produce, and in the larger Southern cities those for the sale of cotton, are the most important.

In most of the larger cities all the chief trades and businesses have their particular exchanges, where the people interested in those trades meet.

Outside of a mere mention of the principles of exchanges in general, it is not within the purview of this work, to deal with any exchanges but those relating particularly to finance; and as an illustration of the workings of such exchanges, and because it is perhaps the most interesting and generally discussed institution of this kind in our country, we have decided to discuss somewhat in detail