APPENDIX

wv

1910. . ..
1914... ...
1917......
1920......
1927......
1930......

AMERICAN
TELEPHONE AND TELEGRAPH
COMPANY

Number
>f Share.
10lders

verage
Number
ny

$5 <°
"08,
.0,55!
120,460
399,121
169 801

UNITED STATES STEEL

Number
f Shareholders

17 123
1

Average
Number of
Shares Hel
230.70
107.64

.62
.04,376
86,034
167,951

sh

59.7
48 42

DENNSYLVANIA RAILROAD

Number
»f Shareholders

65,283
91,571
00,138
33,068
141,202
106.119

-verage
Number of
Shares Held
126.41
109.04
99.82
75.04
70.72
58.60

(IVo) The term “bucketshop” (French, maison de contre partic)
may best be defined as a pretended brokerage firm which makes it a
practice to take a position in the market opposite to that taken by its
customers. Originally, American bucketshops did this by not actually
buying or selling for its customers at all, and depending upon their
misjudging the market. Such firms were largely driven out of business
 by a law enacted in New York State in 1913 which gived the
customer the right to obtain from his broker the name of the firm
to whom his stock has been sold, or from whom it has been bought.
This, unfortunately, did not abolish bucketshops, but only changed
their methods of operation. The modern bucketshop executes the
customer’s initial order quite legitimately and is thus in a position
to give him a correct confirmation as required by law. But secretly,
and usually at once, the bucketshop proceeds to sell out his customer's
“long” stock. If the price of the stock declines, the bucketshop can
‘hen regretfully pretend to close out his customer by selling, and keep
that portion of the customer's margin which would have been lost
had this delayed and pretended sale been actual. If, however, the
stock rises in price, ultimately the bucketshop will be unable to pay
its customers’ profits out of its own pocket; accordingly, the bucketshop
 will suddenly declare its disastrous bankruptcy.
Since most inexperienced brokerage customers are buyers and
“bulls,” it consequently follows that in general bucketshops will make
money when prices decline, and lose it when they rise. The truth of
‘his generalization was seen in 1920-22. During the long “bear”
market from November, 1919, to August, 1921, bucketshops reaped
i harvest and often grew to large size. But after the turn in prices
after the latter date, they began to lose money and in the late fall
>f 1921 they commenced to fail. Bucketshop insolvencies lasted until
well into 1922, and caused immense public losses.
The permanent results of this bucketshop debacle might be summed
up as (1) the liquidation of the Consolidated Stock Exchange of New
York: (2) the higher organization of the New York Curb Market