786 
The RURAL NEW-YORKER 
Jane 10, 1922 
PUBLISHER’S DESK | 
•Just now the “bucket shop"’ methods 
of the cotton exchanges are being shown 
up. The short of the story is that brokers 
have an understanding between themselves 
to make fictitious sales for the purpose of 
making fraudulent price quotations on 
cotton. Then the broker can go out and 
buy cotton on the quotations. The mem¬ 
bers of the New York Milk Exchange 
years ago used to go out and contract for 
milk with farmers on the exchauge price 
ns it would be fixed later by the exchange 
from month to month. Then the same 
men would assemble as members of the 
exchange and make the prices to suit 
themselves, and the farmer was under 
contract to deliver at that price. All the 
exchanges are organized and tuu for the 
same general purpose. When The ItURAi, 
New-Yorker said, some years back, that 
the principal function of exchanges was 
the art of swindling the public a terrible 
protest went up from the exchanges. 
Daily observation and occasional investi¬ 
gations invariably confirm the statement. 
If. instead of being confined to members, 
trading on the exchanges was open to 
anyone who wanted to bid and buy, the 
exchanges would serve a useful purpose. 
The price quotations would then repre¬ 
sent the relation of supply and demand. 
They do not do so as now conducted. 
Their sales are often fictitious. Their 
quotations are consequently misleading. 
The loss to farmers through the manipu¬ 
lations and fictitious quotations of the 
exchanges amount to millions annually. 
The Government suppressed some of them 
during the war. The decree should be 
made permanent. 
Sam Drucker. a fruit and vegetable 
jobber at 114 Warren Street. New York, 
who bad always paid his bills promptly 
every week for two years, bought about 
$15,000 worth of goods last week, which 
is three or four times os much us he had 
ever bought in the same space of time, 
and then made a failure. Iu a sworn 
statement made a little over a year ago 
to the Fruit and Produce Trade Asso¬ 
ciation. Drucker's net: resources showed 
$40,000. and the week before the failure 
he claimed that lie was stronger finan¬ 
cially than ever.—New York Trade Paper. 
Credits in the produce business in New 
York have long been too easy, and losses 
correspondingly heavy. The system, how¬ 
ever, has been improved of late, but in¬ 
stances of this kind indicate that there is 
yet room for improvement; but it is 
doubtful if any reasonable prudence could 
protect the trade from skillfully laid 
plans to defraud. 
The Union Dime Builders, now of 
Washington. D. €., but formerly of 110 
West 34th Street, New York City, gave 
me a contract in 1920 by the terms of 
which I was to pay in $10 a month, and 
was to be entitled to a loan after I had 
paid in one year. Now they say I must 
wait my turn. Is it safe to continue the 
payments? I have already paid in $120. 
New York. widow. 
This concprn is not a corporation and 
has no capital. It consists of a series of 
contracts creating a trusteeship. There 
is a provision in the contract that you are 
entitled to a loan when the amount is 
paid in, provided the money is on hand. 
If it is not available, you cau wait. This 
member is waiting. We suspect there are 
others waiting. At best it is an impru¬ 
dent contract. We can see nothing ahead 
in it but disappointment and loss. If 
this member can get anything out of it 
now. which is doubtful, we would advise 
her to get what she can—and quick. We 
would be agreeably surprised if she gets 
anything. 
Saturday’s papers contained the news 
that a former member of the Consolidated, 
Nathaniel Goldberg, had been convicted 
in the Court of General Sessions of lar¬ 
ceny in having persuaded a milliner to 
turn over to him her life savings of $7,500 
as collateral for phantom stocks. In 
April of last year, when she demanded 
her money or the stocks she was supposed 
to have purchased, she received neither, 
and next day Goldberg failed.—Local 
Paper. 
The above record of an individual case 
is more or less of a common occurrence. 
It is more frequent just now because 
public attention is centered on it. The 
victims have become suspicious, and are 
demanding a settlement. The conditions 
of the. brokers are no better or no worse 
than at any other time, only they are 
being made public, and the demands for 
settlement, force the failures. This mil¬ 
liner is in the position of having worked 
and saved for a lifetime for the privilege 
of sending Nathaniel Goldberg to jail for 
a few months. It will not he long before 
he is back at the same old game. 
JEW RACINE 
THRESHERS 
The 27 recent failures in the Consoli¬ 
dated Stock Exchange amounted to 
$5,000,000. The poorer classes were 
heaviest losers. The concerns that failed 
were mostly new members of the ex¬ 
chauge. One firm had $100 of assets and 
liabilities of $1,000,000, and this indi¬ 
cates (he general condition of all that 
have come to public attention through 
court records of bankruptcy.—New York 
City General News. 
Like the New York Stock Exchange, 
the Consolidated Stock Exchange is a 
mere association of brokers. Neither of 
them is incorporated. Both prescribe their 
own Tules and conduct their operations in 
their own way. The Stock Exchange, 
however, does not deal in less than 100 
share lots. The excuse for the Consoli¬ 
dated Exchange is that it deals in small 
or so-called broken lots. The fact that a 
firm of brokers advertises that it is a 
member of an exchange gives it a stand¬ 
ing in the public mind that the record 
does not seem to justify. 
Wo are frequently asked by corre¬ 
spondents for the standing of stock¬ 
brokers. It would not be strange if some 
of our friends thought our replies showed 
prejudice or lack of information. We 
confess to lack of information. With a 
few conspicuous exceptions it is impos¬ 
sible to get reliable information of the 
financial worth of stockbrokers. They 
may he apparently sound one day and 
broke the next. Many of them do prin¬ 
cipally a “bucket shop” business. That 
is, they take a customer’s money on mar¬ 
gin and do not buy the stock at all. The 
transaction is equivalent to a bet by the 
customer that a particular stock will ad¬ 
vance in price. If it does, he wins the 
advance, less commissions and alleged in¬ 
terest on the price of the stock less the 
deposit. All the bets for the day are 
pooled or “bucketed.” If there are more 
customers who lose than win the broker 
gains the difference, and the losers are 
required to put up gjore money as mar¬ 
gin. If the customers should win, the 
account is carried along, and subsequent 
transactions are pretty sure to show a 
loss. If not, and demands for settlement 
are made by the investor, the concern 
simply fails. To keep within the law 
some brokers recently have adopted the 
practice of placing an order to buy a 
stock for a customer and another order 
to sell the same stock at the same price. 
The effect is the same as if no stock was 
bought. What we are trying to do is to 
make it plain to our people that these 
marginal stock operations are simple bets 
or plain gambles, with all the chances 
against the gambler or customer. The 
hazard of sending money to such concerns 
and running open accounts with them 
must be equally apparent. Most of tlie 
transactions are illegal. Many of them 
are criminal. Occasionally one is con- 
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