The Auction System 177 



a powerful influence in the money market. They were directors 

 in nearly every bank in New York and obtained almost indefinite 

 lines of credit.**^ A report by a Citizens Committee in 1828 put 

 it this way : "As auctioneers, in many cases give their own notes in 

 payment for goods sold by them while at the same time they have 

 the use of the very large amounts which they receive from those 

 who buy from them, an increditable capital is thus accumulated 

 in the hands of a few persons, who form a moneyed aristocracy, 

 influencing the banks, controlling by the fear of their displeasure, 

 the free expression of public opinion, and hostile to the genius of 

 republican government."*^ Since they took such precautions to 

 have good names on the notes which they accepted for mer- 

 chandise, their paper was accepted by the banks as prime ; when 

 a buyer became insolvent he commonly assigned his whole efifects 

 to protect his indorser and the auctioneers thus virtually absorbed 

 the whole estate, to the detriment of his other debts by private 

 sale. "Relying on this preference, they are proverbial, as a body, 

 for trusting many dealers who, among merchants, are not con- 

 sidered trustworthy." . . . and "give ruinous facilities to rash 

 young men to begin business without experience, character, or 

 capital, and multiply failures to an extent that could not otherwise 

 happen."*^ 



The rate of commission was determined by private bargain but 

 tended to uniformity as among the auctioneers ; the rates differed 

 with the kind of goods and services performed. In a calculation 

 for eleven New York auctioneers in 1829 a writer used 3/^% 

 as the normal rate on foreign goods sold.*** In a schedule of 

 rates recommended for adoption and allowed by the New York 

 Chamber of Commerce when no agreement subsisted to the con- 

 trary about 1820-5 the rate for sale of merchandise for foreign 

 business was 5% and for inland business 2^^%.^" The profits 

 of some auction firms were considered very large, the net to one 

 firm exceeding $100,000 a year.^^ 



'' Bolles, I, 389. 



^' Niles, 34 : 260. 



'' Ibid. 



*" Niles, 35 : 403. 



^"Hardie, Description, 316. Many other rates are also given, 



''Niles, 18: 421. 



