Part 21
The Stock Exchange is located on the west side of Broad street, just out of Wall street. It is a fine white marble edifice, with a portico of iron, painted flashily in black and gold. It extends back to New street, with an entrance on that street. There is also an entrance on Wall street. It contains the "New York Stock Exchange," "The Mining Board," and the "Government Board."
During the spring and summer of 1871 the internal arrangements of the building were very much improved. The refitting cost the brokers $60,000, but they now have the handsomest establishment of its kind in the world.
The main entrance is on Broad street, and from this the visitor passes into a room, the larger portion of which is separated from the Broad street end by an iron railing. This is "The Long Room," and during the day it is almost always filled with a noisy and not over-nice crowd. It is the scene of the irregular sales of stocks. Any one who can raise $50 can purchase a season ticket to this hall, and once admitted can sell and purchase stocks without being a member of the Regular Board. This arrangement has nearly put an end to the sales of stocks on the side walks, and has given a tinge of respectability to the class known as "Curb-stone Brokers." A dozen or more different stocks may be sold here at once, and the sale may be continued as long as the seller sees fit. There is no regular organization of the brokers operating here, though these men control the bulk of the sales made in the street. They are noisy and seem half demented in their frantic efforts to make sales.
The "Stock Exchange" occupies the main hall, which is on the floor above the Long Room. This hall is one of the most beautiful apartments in the city. It is seventy-four feet long, fifty-four feet wide, and fifty-two feet four inches high. Its lofty ceiling is arched and decorated with bright red and buff penciling upon a sky blue ground, while the walls are relieved by broad square pilasters, painted in brilliant bronze, with tall windows and arched tops rising between, and other spaces between the columns covered with drapery in more subdued colors. Up to a few feet from the floor the painting is in a dark-hued bronze. The coloring is in the Moorish style throughout, and the effect of the whole is very fine. At the north end is the platform for the desks of the Vice-President and Secretary, and on each side of this is a black board for recording the quotations of the session. On the same platform is the desk and instrument of the stock telegraph operator. At the south end of the hall is a light gallery capable of holding 200 persons, for the use of visitors. In connection with the hall are several committee, cloak and ante-rooms. In the centre of the ceiling is a huge ventilator, beneath which is suspended the lighting apparatus, containing 100 burners. A chamber five feet in depth underlies the hall and the adjoining lobby, and in it are laid pipes for conducting warm air.
[Picture: THE STOCK EXCHANGE.]
At the base of the walls is an open iron grating covering the apertures of a shaft leading from the engine-room. Through this shaft warm air is forced into the hall in winter, and cool air in summer, thus securing perfect ventilation.
The Stock Exchange Board is an incorporated company, and is the only lawful association in the city for the transaction of business connected with stocks. It consists of 1050 members, but the control of its affairs is vested in a council of forty members, together with the President, Secretary and Treasurer in their unofficial capacity. The admission fee is $5000, and a seat in the Board becomes the absolute personal property of the broker, who can sell or otherwise dispose of it as he would of his watch or his coat. Candidates are admitted by ballot and with great care, the object being to secure the exclusion of all but men of known integrity, for the Board requires the most scrupulous good faith in the transactions of all its members. Four black balls will prevent the admission of a candidate whether he wishes to enter by purchase or otherwise. Candidates must submit to a close scrutiny of their previous lives, and must show a clear record.
There are two daily sessions of the Board, one in the morning and the other in the afternoon. The securities offered at these meetings are divided into two classes, the Regular and the Free List. No stock or bond can be dealt in until it has been rigidly examined by a committee, and found to be a _bona fide_ security.
At half-past ten o'clock in the morning, the Morning Board is called to order by the First Vice-President. The Regular List, which is made up in advance of the meeting, must always be called, and called first. The Free List may be called or not at the option of the Board. The Regular List consists of 1st. Miscellaneous Stocks. 2d. Railroad Stocks. 3d. State Bonds. 4th. City Stocks. 5th. Railroad Bonds.
The session opens with the reading of the minutes of the previous day. Then comes the call of the Regular List. The call of Miscellaneous Stocks awakens but little excitement. Bids follow quickly upon the announcement of the stocks, and the transactions, as they are announced by the cries of the brokers are repeated by the Vice-President to the Assistant Secretary, who records them in the journal, and they are also recorded by a clerk on a black board in full view of the members. Where there is a doubt respecting a sale or purchase the Vice-President decides, and his decision is final, unless reversed by the votes of a majority of the members present.
[Picture: THE NEW YORK STOCK EXCHANGE BOARD IN SESSION.]
The call of railroad securities brings the brokers to their feet, and the real business of the day begins. Offers and bids, shouted in deep bass, high treble, or shrill falsetto, resound through the hall, and in a few minutes the jovial-looking brokers seem to be on the verge of madness. How they yell and shout, and stamp, and gesticulate. The roar and confusion are bewildering to a stranger, but the keen, practised ears of the Vice-President at once recognize the various transactions, and down they go in the Secretary's book, and on the black board, while the solemn-vizaged telegraph operator sends them clicking into every broker's office in the city. High over all rings the voice of Peter, the keeper of the gate, calling out members for whom telegrams or visitors have arrived.
The other stocks awaken more or less excitement, and when the Regular List is completed, the Free List is in order, and the Vice-President calls such stocks as the members express a desire to deal in. Then, unless there is a wish to call up some stock hastily passed over on the call of the Regular List, the session closes.
At one o'clock, the afternoon session is held, and the routine of the morning is gone over again. The transactions of both sessions are carefully recorded in the Secretary's books.
The Vice-President receives a salary of $7000 per annum for his services, which are not light. The Secretary and Assistant Secretary, and Roll-keeper do the rest of the work of the Board. The last named keeps a record of the fines, which yield an exceedingly large revenue to the Board. The brokers are not the most dignified of mortals in their meetings, but are very much given to disorderly conduct and practical jokes. The annual dues of the Exchange are but fifty dollars, but the average broker pays at least ten times as much in fines. To interrupt the presiding officer during a call of the stocks subjects the offender to a fine of not less than twenty-five cents for each offence; to smoke a cigar within the Exchange costs five dollars; to be absent from special meetings is to incur a fine of not more than five dollars; to stand on a table or chair is punishable with a fine of one dollar; to throw a paper dart or ball at a member during the session of the Board costs ten dollars; and other offences may be punished with fines assessed by the Vice-President at any sum between twenty-five cents and five dollars.
Each day a list of stocks to be put in the market is made out, and no others can be sold during the sessions. The Board can refuse to offer any particular stock for sale, and a guarantee is required of the party making the sale. The members of the Board are men of character, and their transactions are fair and open. They are required to fulfil all contracts in good faith, however great the loss to themselves, on pain of expulsion from the Board, and it is very rare that an expelled member can be reinstated.
III. THE GOVERNMENT BOARD.
The room used by the Government Board, in which all transactions in the bonds and securities of the United States take place, is located on the second floor of the Exchange building. It is handsomely frescoed and furnished in green rep. The basement beneath this room is an immense vault, containing 618 safes, arranged in three tiers, and guarded by four policemen detailed for that purpose. These safes are a foot and a half square, and are rented by the brokers who deposit in them overnight small tin boxes containing their bonds and other securities. It is estimated that the value of the securities nightly deposited here is over two hundred millions of dollars.
The seats of the brokers in the Government Room are arranged in tiers, rising one above the other, from the floor to the wall. The officers occupy a platform at the head of the chamber. The order of business is very much like that of the Stock Board.
"The Vice-President begins:
"'6s '81 registered--'81 coupon. 5.20s '62 registered--coupon. What's bid?'
"Here and there from flanking chairs come sputtering bids or offers:
"'Ten thousand at 3/8, buyer 3.'
"'I'll give an 1/8, seller 3, for the lot.'
"'0.25, buyer 30, for fifty thousand.'
"'0.25, regular, for any part of five thousand.'
"_First Voice_. 'Sold,--five hundred.'
"The presiding officer repeats the sale and terms, the secretary makes his registry, and a new bond is started.
"Sometimes when 5.20s are called, there is at first only one voice which rings the changes on 'I'll give 115. I'll give '15 for a thousand,--'15 for a thousand.' Presently, however, before any response follows the offer, a member in a distant corner, either carelessly or maliciously, shouts out, 'I'll give '14 for a thousand,--'14 for a thousand.'
"The Vice-President plies his hammer: 'Fine Irving--fine Irving fifty cents.' The Roll keeper proceeds to make his little note of it, and Irving, who has violated the rule, founded on common sense, which forbids a member from making a bid below or an offer above the one which has the floor immediately subsides amid the laughter of his neighbors.
"Occasionally an interruption of a grosser character occurs, a member leaping from his seat on some slight provocation, and striking off the hat of the man who has offended. Fine Harrison, fine Harrison again, _fine_, FINE him again,--FINE Harrison,' cries the Vice-President, repeating the word without cessation until the broker's wrath has been appeased, and he returns to his chair with the disagreeable reflection that a heavy score is against him for the semi-annual settlement-day. Every repetition of that fatal monosyllable was a fresh mark of fifty cents or a dollar against his name. Generally, however, the Government brokers are more orderly than their neighbors in the Regular Board. Indeed, the whole proceedings are more decorous and respectful, the bidding, half the time, being carried on in a low conversational tone. At second call there is a brief excitement, but when 'things are dull' throughout the street, this room peculiarly reflects the external influences.
"Very different it is, however, on days when some special cause provokes great fluctuations. Then the members spring from their seats, arms, hands, excitable faces, rapid vociferations, all come in play, and the element of pantomime performs its part in assisting the human voice as naturally as among the Italians of Syracuse. To the uninitiated the biddings here are as unintelligible as elsewhere, sounding to ordinary ears like the gibberish of Victor Hugo's Compachinos. But the comparative quietude of this Board renders it easier to follow the course of the market, to detect the shades of difference in the running offers, and generally to get a clearer conception of this part of the machinery of stock brokerage."
In former times brokers were subjected to great expense in keeping a host of runners and messengers to bring them news of the transactions at the Exchanges. The introduction of the Stock Telegraph has made a great and beneficial change in this respect. In every broker's office, and in the principal hotels and restaurants of the city, there is an automatic recording instrument connected by telegraphic wires with an instrument in the Stock and Gold Exchanges. The operator in these exchanges indicates the quotations of stocks and gold on his own instrument, and these quotations are repeated by the instruments in the offices throughout the city. These office instruments print the quotations in plain Roman letters and figures on a ribbon of paper, so that any one can read and understand them. Thus one man does the work formerly required of several hundred, and no time is lost in conveying the information. The broker in his office is informed of the transactions at the Exchange at the very instant they are made.
IV. THE GOLD EXCHANGE.
You pass from Broad street into the basement of a brown stone building just below the Stock Exchange, and find yourself in a long, dimly-lighted passage way, which leads into a small courtyard. Before you is a steep stairway leading to a narrow and dirty entry. At the end of this entry is a gloomy looking door. Pass through it, and you are in the famous Gold Exchange.
This is a showy apartment in the style of an amphitheatre, with an ugly fountain in the centre of the floor. An iron railing encloses the fountain. Against the New street end is the platform occupied by the President and Secretary, and on the right of this is the telegraph office. There are two galleries connected with the room, one for the use of visitors provided with tickets, and the other free to all comers. There is an indicator on the outer wall of the building on New street, from which the price of gold is announced to the crowd without. It is a common habit with sporting men of the lower class to frequent New street and bet on the indicator.
There are but few benches in the Gold Room. The members of the Board are too nervous and excitable to sit still, and seats would soon be broken to pieces in their wild rushing up and down the floor.
The business of the day begins about ten o'clock. The rap of the President's gavel opens the session, and as there is but one thing dealt in--gold--the bids follow the sound of the mallet. The noise and confusion are greater here than in the Stock Board or the Long Room, and it seems impossible to a stranger that the President should be able to follow the various transactions. When the excitement is at its height, the scene resembles "pandemonium broken loose." The members rush wildly about, without any apparent aim. They stamp, yell, shake their arms, heads, and bodies violently, and almost trample each other to death in their frenzied struggles. Men who in private life excite the admiration of their friends by the repose and dignity of their manner, here join in the furious whirl, and seem more like maniacs than sensible human beings. And yet every yell, every gesture, is fraught with the most momentous consequences. These seeming maniacs have a method in their madness, and are changing at every breath the value of the currency upon which the whole business of the country rests. When the fluctuations are very great, fortunes are made and lost here every hour.
Connected with the business of the Gold Room are the Gold Exchange Bank and the Clearing House. The method of settlement with these institutions, which are indispensable where gold passes so rapidly from hand to hand in the Exchange, is as follows: "On or before half past twelve o'clock, a statement of all the purchases or sales made by each broker on the preceding day must be rendered to the bank. If the gold bought be in excess of that sold, a check for the difference must accompany the statement. If deposits in gold or currency are not kept in the bank, the coin must be delivered at every deficiency. The Board adjourns at twelve, in order to enable tardy dealers to complete their accounts. Provided all contracts are honored, the bank must settle by two P.M. In case of default, the amount in abeyance is debited or credited to the broker who suffers by the failure."
The Clearing House Association was created in 1853, and represents the sum of the financial business of the city. "The Association is located in the third story of the building of the Bank of New York. The centre of the room is occupied by a bank counter, extending on four sides, with a passage inside and out. Fifty-nine desks are placed on the counter for the use of the fifty-nine banks represented in the Association. Each desk bears the name of the bank to which it belongs. Fitted up in each desk are fifty-nine pigeon holes for the checks of the various banks. Two clerks represent each bank. One remains at the desk and receives all the checks on his bank. He signs the name of the bank to the sheet which each outside clerk holds in his hand. These outside clerks go from desk to desk and leave the checks received the day before, with the banks on which they are drawn. Banks do not begin public business till ten; but clerks have to be on hand at eight, when all checks are assorted and arranged for delivery at the Clearing House.
"At ten minutes before ten the bank messengers begin to assemble and take their places. As they enter they leave with the messenger a slip containing an exact account of the bank they represent. These statements are put on a sheet prepared for that purpose, and must conform precisely to the checks received inside, before the Clearing House closes its duties. If there is any error or discrepancy, the bank is immediately notified by telegraph, and the clerks kept until the matter is satisfactorily adjusted. At ten, promptly, business begins. Clerks come rushing in with small trunks, tin boxes, or with bundles in their arms, and take their seats at the desks. On the side of the room entered only from the manager's office is a desk, not unlike a pulpit. Precisely at ten the bell rings, the manager steps into his box, brings down his gavel, and the work of the day begins. Quiet prevails. No loud talking is allowed, and no confusion. A bank late is fined two dollars; a party violating the rules, or guilty of insubordination, is fined two dollars and reported to the hank. On repetition, he is expelled the Clearing House. The daily transactions of the Clearing House varies from ninety-eight to one hundred millions. The system is so nicely balanced that three millions daily settle the difference. Each bank indebted to the Clearing House must send in its check before half after one. Creditors get the Clearing House check at the same hour. Daily business is squared and all accounts closed at half after three. Every bank in the city is connected with the Clearing House by telegraph. The morning work of clearing one hundred millions, occupies ten minutes. Long before the clerks can reach the bank, its officers are acquainted with the exact state of their account, and know what loans to grant or refuse. Through the Clearing House each bank is connected with every other in the city. If a doubtful check is presented, if paper to be negotiated is not exactly clear, while the party offering the paper or check is entertained by some member of the bank, the telegraph is making minute inquiries about his financial standing. Before the conference closes, the bank knows the exact facts of the case."
V. CURB-STONE BROKERS.
The members of the Stock and Gold Exchange, as has been stated, are men of character. Their transactions are governed by certain fixed rules, and they are required, on pain of expulsion from the Exchange, to observe the strictest good faith in their dealings with each other and with their customers. If the operations of the street were entirely confined to them, business in Wall street might be regarded as in safe hands. But there is another class, even more numerous and quite as well skilled in the ways of the street, who transact a vast part of its business. They are not members of the Exchange, and in former times used to assemble around its doors in Broad and New streets, and carry on their operations on the sidewalk. Hence their designation, "Curb-stone brokers." They no longer assemble on the pavement, for the Exchange has thrown open to them its Long Room. Any one who can pay $50 a year for a ticket of admission, and who has brains and nerve enough to enter upon the struggle, can sell or buy in the Long Room. This is better than standing in the street, exposed to the weather, and moreover gives a certain respectability to the "operator," although he may carry his sole capital in his head, and his office in his breeches-pocket.
No rules or regulations apply to the Long Room. The honest man and the rogue mingle together here, and the broker must be sure of his man. Many of the members of the Exchange buy and sell here, either in person or through their representatives, and many good men who are unable to enter the Exchange conduct their business here. Others again prefer the freedom and the wider field of the Long Room. Still, there are many sharpers here, who would fleece a victim out of his last cent.
The daily transactions of the Long Room are said to average about $70,000,000, or ten times the business done in the Regular Board. Fortune is much more uncertain here than in the room up stairs. Men buy and sell here with the recklessness of gamblers. The noise and excitement are almost as great as in the Gold Room. The absence of the fixed laws of the Regular Boards puts every one on his own resources, and men are compelled to use all their ingenuity, all their determination to guard against a surprise or unfair dealing. It is every one for himself here. A dozen or more small or new operators are ruined and swept away daily, and in times of great financial excitement the Long Room shakes the foundations of even some of the strongest houses in the street.
VI. THE BUSINESS OF THE STREET.