A14 THE WORK OF THE STOCK EXCHANGE
Perhaps the simplest way to describe the operations occur-
ring in a typical broker’s office is to follow a transaction of
a single customer from beginning to end. In an earlier chapter*
this method was in part employed. But at that time many
details of the typical transaction cited were omitted, since they
involved technical procedure still unexplained.
Opening a Brokerage Account.—Accordingly, we will
suppose that Mr. Blank has for the first time found his way
into the customers’ room of Jenkins & Co.’s main office at 500
Wall Street. Before he can buy or sell any securities there,
however, he must open an account with the firm, a proceeding
which closely resembles opening a bank account. Usually the
customer will be personally introduced to the broker by a
mutual acquaintance, and will then be given a card upon which
to fill out his name, address, and present occupation. In some
brokerage houses the prospective customer is also requested to
sign an agreement that he will maintain with his broker suffi-
cient margin on his account, and that in the event of his failure
to respond promptly to a call for additional margin the broker-
age house is authorized to take such action as it may deem
necessary to protect its interests. Granted of course proper
personal responsibility, the Exchange is open to all Americans
on an absolutely equal footing.
As a necessary consequence to opening his account, Mr.
Blank deposits with Jenkins & Co., say, five $1,000 Atchison,
Topeka & Santa Fe R. R. general 4% bonds, 40 shares of
Pennsylvania R. R. stock, and his check for $8,000—or about
$15,300 altogether—to provide margin for such transactions
as he may later desire to enter into. The value of the securities
thus deposited as margin does not, however, serve to reduce
the customer’s debit balance with the firm. Some commission
houses frown on accepting security collateral for marginal
purposes, although the practice is sufficiently extensive to
justify the above example.
1 See Chapter VI.
