Curb Markets

With a brief mention of the New York and Boston curb markets, I shall have finished with the principal exchanges in the country. The New York Curb is a semi-organized stock market held in the open air during exchange hours. It occupies a section of Broad Street. An enclosure is made in the center of the roadway by means of a rope within which the operators are supposed to confine themselves, leaving space on either side for the passage of street traffic; but during days of active trading, the crowd often extends from cnrb to curb. Until recently there was no sort of control over the market. The brokers who traded there were under no rules or restraint whatever. Any securities could be listed there, for a listing meant merely that some broker introduced it to the other brokers who were willing to execute orders in it.

Fortunately for the curb, an important reform was inaugurated in the formation of an organization to supervise its conduct and to pass upon all securities and the character of the brokers. There are about 200 subscribers who contribute to the maintenance of the expenses of the curb. An agency has been established by common consent through which the rules and regulations are prescribed. This agency consists simply of a single individual who through his long association with the curb is tacitly accepted as arbiter.

The curb affords a public market where all persons can buy and sell securities which are not listed on any organized exchange. There is nothing on the curb which corresponds to the listing processes of the stock exchange, though a slight investigation is made by the agent of the curb of the securities offered. Yet the fact that a security is quoted on the curb should create no presumption in its favor. Some of the securities are meritorious, and quite an array of securities now listed on the stock exchange have found their way there through the curb market.

It has been stated that about 85 per cent of the business of the curb comes through the offices of members of the New York Stock Exchange. A provision of the constitution of that exchange prohibits its members from becoming members of or dealing on any other organized stock exchange in New York. Accordingly operators on the curb market have not attempted to effect a formal organization. This condition is perhaps responsible for some of the ill repute into which the curb market has at times fallen.

The Boston Curb Market was organized in the same way a year ago and is now housed in a building. While a few industrial stocks are dealt in on both these markets, the principal listings are in mining stocks.

Foreign Exchanges

The most important market for our securities abroad is in London. There some of them are listed on the stock exchange; the greater number, however, are listed on the curb. There is a difference in time between the London and New York markets of about five hours, a sufficient margin for trading between the two. American traders will sometimes sell in London five hours ahead of the New York market and buy their stocks back in New York the same day, expecting to profit by a decline here as a cause of a weak opening in our stocks in London.

The London market quotations sometimes exert a pronounced influence upon our own shares, and consequently stock market operators closely watch London prices which are on hand before our own day's business session begins.

There is some dealing on the Berlin Bourse in the American stocks, but not to an extent worth mentioning. Of late, France has shown considerable interest in our securities, a few of which have succeeded in forcing their way into the sacred precinct of the "parquette," which is the bourse proper. But the majority of American securities in the Paris market are still kicking their heels out on the "Coulisse," which, as a market, corresponds to our curb.

Holland, next to England, is the most important market for American securities.

Listed And Unlisted Securities

We hear a good deal pro and con about listed securities. The subject is very much discussed, not only wherever security buyers congregate, but frequently in the financial columns of the newspapers. The most convincing argument brought forward by the champions of listed securities is that the latter have a market and bear a fixed quotation. That is to say, they can be sold when it becomes necessary to sell them. Their point is that individuals, when they make an investment, wish to be in a position where they can always sell what they buy. Then they also contend that it is much easier to obtain loans upon securities listed on some exchange. But fallacy is to be found in all their arguments.

Standard Oil shares are not listed on the stock exchange. This security is traded in on the open market and there is not the least difficulty experienced in quickly finding a buyer, should one wish to sell the stock, nor will a person be turned out of doors by any banker if he wishes to borrow any money, as there is no more desirable collateral for a loan than the shares of the Standard Oil companies. There are any number of other desirable stocks in a similar position. A few which might be mentioned are Royal Baking Powder, Singer Sewing Machine, American Typefounders, Otis Elevator, and Borden's Condensed Milk.

In the final analysis, it is not whether a stock is listed or not which gives it marketability, but its intrinsic merit as an investment. This is what the buyers of stocks first consider, and quite properly. Furthermore, this element is also what bankers first seek to determine when making loans - or at least they should do so. If a corporation is doing a large business, has for years paid good dividends and continues to pay them, then it should not be difficult to sell the stock when the occasion to do so arises, or to borrow money upon it.