354 THE GRAIN TRADE 



shop fight is told, although it can be told but briefly and inade- 

 quately here. A bucket shop is a counterfeit of a branch office of 

 a member of the genuine exchange, and like most counterfeits, is 

 a good imitation. It contains a blackboard for posting the con- 

 tinuous quotations as they come in over the wire. In this respect 

 it resembles the branch office of any large " Private Wire house," 

 that is, house operating leased wires and maintaining branch 

 offices. Some of the largest dealers in both cash and futures on 

 the organized exchanges are private wire houses. However, 

 private wire houses are members of the regular exchanges, and all 

 orders coming to them are executed on the open market on the 

 trading floor of the exchange that is, become binding contracts 

 whose terms must be and are fulfilled. The private wire house 

 usually requires a customer to deposit a so-called " margin" of 

 ten per cent to protect the trade against an adverse turn in the 

 market. Thus, if the trade happens to be for 5,000 bushels of 

 corn at one dollar a bushel, the margin would be $500. The 

 bucket shop operator requires a very small margin, probably one 

 cent a bushel or one-half cent a bushel, so that five dollars could 

 margin a trade of 1,000 bushels. The operator of the bucket shop 

 is not a member of the Exchange. He does not execute his orders 

 on any exchange, and hence these " orders" are mere bets, and 

 have no significance in registering supply and demand influences 

 or in affording hedging facilities. The operator of the bucket shop 

 takes the other side of the trade himself, that is, in trade language, 

 he "buckets the trade." 4 The customer has a very slender chance 

 indeed of winning. His margin is so small that upon a very slight 

 fluctuation of the market his margin is gone and his trade is closed. 

 And since the operator has it within his power to post false quota- 

 tions, it is obvious that only enough customers are permitted to 

 win to serve as bait for new victims. Bucket-shop gambling 

 spread rapidly over the United States. Chicago, being the center 

 for future trading for the whole United States and for the world, 

 naturally became the leader in the long struggle against the power- 

 ful, deeply intrenched bucket-shop interests. In the early 80's 

 the evil became so prominent as to engage a very large share of 

 the attention of the meetings of the Directors of the Board of 

 Trade. In the year 1890 the Board decided to stop the giving 

 out of all quotations on futures, and such an embargo was actually 



4 This practice formerly occurred at intervals on the exchanges. It is now 

 strictly forbidden. One exchange expelled one of its ex-presidents for bucket- 

 ing trades. The exchanges have now practically eliminated this practice. 



