THE FLOOR TRADER AND THE SPECIALIST 227 
70 to 65 is here the source of the inevitably violent price fluc- 
tuation. We will also presuppose that a severe decline has taken 
place in this stock the day before and that overnight the divi- 
dend has been reduced 1%. At the close the day before, 70 
was bid for 200 shares, and 100 were offered at 73. 
At 9:55 the next morning the specialist finds that in addi- 
tion to the orders in his book, as shown in Figure 15, he has 
five 100-share lots to sell at the market. And now comes the 
crucial question—at what price will the market open? No 
matter what price between 69 and 65 this stock sells at, the 
specialist’s shares to sell at the market will be increased by the 
many stop orders to sell. Under such circumstances stock to 
be sold is bound greatly to overbalance stock to be bought, and 
hence a severe decline is unavoidable. In this instance the 
specialist happens to have the market all to himself, and opens 
the stock “1,600 shares sold at 64.” By so doing all selling 
and buying orders, except the 100 to sell at 73, are executed at 
this single price. The disadvantage of this method of opening 
the stock is, of course, that the 500 shares to sell at the market 
are sold at a very low price. But it must be remembered that 
the specialist as an agent and broker stands in the same rela- 
tionship to his buying customers as to his selling customers. 
[n the light of the obvious conditions of supply and demand in 
this stock, prices are bound to decline. What is fair to pay for 
the seller’s stock when the specialist knows these conditions? 
Why should he pay more for that stock than the price at which 
all the orders can be crossed? So it is undoubtedly better that 
the stock should open 1,600 shares at 64. Since this is the 
first and only sale, customers could not declare that they had 
heen discriminated against and would probably be inclined to 
take such an occurrence as the fortunes of war. 
Advantage of This System of Opening.—The advantage 
and fairness of opening the stock in this way becomes more 
apparent when some other way is attempted. Let us suppose 
that in the above instance the specialist proceeded as follows: