Break Even. To close a transaction with neither profit nor loss; to come out just even. British Columbia. The British Columbia Copper Co., Limited. Broken Lot. Same as "odd lot " in reference to stocks, and less than $10,000, par value, in bonds. Broker. One who makes purchases and sales for othershis principals acts as a middleman, receiving a fixed fee called "brokerage" (see next subject; also "Jobber ") for his services. Although many consider a "broker as an agent," it must be understood that there is a distinction between the two. The "broker" endeavours to bring together the two parties to the transactions, as, for instance, the buyer and seller, and effect an agreement between them. The best illustration would be in the case of an insurance agent and broker. The latter is authorized to act by one or more companies, while the former represents no company in particular, but will usually obtain insurance with the company where he can make the best trade, and thus acts in the capacity of bringing the insurer and insured to an agreement.1 Brokers are of many kinds: stock, grain, cotton, oil, real estate, and so on. Brokerage. Practically the same as "commission," but used to denote the fee charged by any kind of a "broker." If you sell a hundred shares of some stock through a stock broker, he will charge you a certain percentage, say $15; that is, 15 cents for each share, or a total for the hundred shares of $15. This charge is called "brokerage." Brokerage Transactions. See "Commission" and "Margin." Broker's Board. Same as a "Stock Exchange." Broker's Note. A paper given in writing by a broker to the party for whom he is acting, setting forth the terms of the purchase, or sale, as the case may be. Brown Brothers' Virginia Debt Certificates. After West Virginia was set aside from Virginia, it refused to accept what was considered its just proportion of the debt of the original State of Virginia. A plan was proposed for an adjustment, and a majority of the holders of the original certificates deposited their evidences of indebtedness with Messrs. Brown Brothers & Company of New York, and their receipts bear the title of Virginia Debt Certificates. After many years' litigation a partial settlement of the claims was made in 1919 and 1920 by the issue of $13,500,000 34% serial bonds as an obligation of the State of West Virginia. B. R. T. Brooklyn Rapid Transit Co. "B" Stock (or Shares). See "Preferred Shares (or Stock)." Bucketed. When an order has gone through the machinery 1 "Essentials of Business Law," Burdick. of a "bucket shop " and been accepted by the same, theoretically executed, it has been "bucketed." No actual purchase or sale takes place, the broker must pay losses if the customer has guessed the right way, and vice versa if the opposite. "Bucketed" is used to denote the handling by a legitimate stock exchange broker of his customer's accounts on "bucket shop" methods. In other words, he takes the opposite end of the bet to his customer, and buys if his customer sells, and sells if he buys. By this plan, however, securities are actually bought and sold, to that extent differing from a real " bucket shop." Such practice is not in good repute.1 Bucket Shops. (See "Margin," which read first.) "Bucket shops" are run by irresponsible brokers, not members of any stock exchange, and who do a marginal business upon one dollar a share and upwards. As a matter of fact, in the case of a "bucket shop," the stock itself is usually not purchased Inasmuch as legitimate stock exchange brokers have been known to "bucket" their orders accepting the customer's loss or paying him the profit upon the settlement of the account — it may be sometimes desirable for a customer to know as to whether his orders are actually being executed. This may be done by his demanding the name of the broker on the opposite side of the transaction; that is, the one to whom his security has been sold or from whom it was purchased. The rules of the stock exchange entitle him to this information. 2 "The origin of the term 'bucket shop' is not now often referred to, and there may be some people who do not know what it is. The oldfashioned stock broker, member of the New York Stock Exchange, for instance, would not take an order to buy or sell less than an even hundred shares of stock on margin. He would refuse to deal in odd lots. So those people whose capital did not admit of their furnishing the necessary margin to trade in so large an amount were shut out from trading. Thus sprang up a class of 'brokers' not members of the exchange, yet calling themselves brokers, who made a practice of accepting from a number of different customers orders for odd lots until the total amounted to a hundred or some multiple of a hundred shares. Then they would give joint order as one to some regular broker for execution, putting all the small orders together to make one sufficiently large, as the staves of a bucket are put together to make the bucket. Hence the nickname of these intermediate 'brokers' or jobbers grew to be bucket shop keepers.' In more recent times the reputable 'broken lot' brokers organized an exchange of their own for the direct handling of these small trades, and the term 'bucket shop,' accordingly, possesses a present significance less respectable than that of its origin.' Providence Journal. 3 The Constitution of the New York Stock Exchange prohibits its members having any connection whatsoever with "bucket shops," and treats upon the subject as follows: Any member of this Exchange who is interested in, or associated in business with, or whose office is connected directly or indirectly by wire or other method or contrivance with, any organization, firm, or individual engaged in the business of dealing in differences or quotations on the fluctuations in the market price of any commodity or security without a bona-fide purchase or sale of said commodity or security in a regular market or Exchange, shall on conviction thereof be deemed to have com mitted an act or acts detrimental to the interest and welfare of this Exchange." or sold for the customer. If the order is actually executed upon a bona fide exchange, then the "bucket shop" puts in a contrary order for a like amount. For example, a "bucket shop" would sell an amount equivalent to the customer's purchase, or, likewise, purchase an equivalent amount to his sale, thus in no event carrying stocks. It amounts to the customer wagering his money upon a given stock either going up or down, and the "bucket shop," accepting his wager, gambles the other way; and, in the long run, they, like most other gambling establishments, come out winners. A specific example would be for a person having about $10 to go into a place and buy, say, ten shares of stock, with the anticipation of a rise. He will be charged the buying and selling commission, and interest on the account, the same as in a legitimate broker's office, although no stock will be actually purchased or sold. If the stock goes down more than his dollar margin, unless he puts up more money to protect himself, he will be sold out and the transaction closed, and he will have incurred a loss. If it goes up and he chooses to sell, he will be paid the difference between the buying and selling values of the stock, less the two commissions, and interest on the account, plus his dollar per share originally deposited. In this event the "bucket shop" is the loser for the amount the stock has advanced less the two commissions and interest, unless, by chance, they feared that the stock might advance and to protect themselves had actually purchased. In that case they, in turn, would have had to pay a commission to a legitimate broker. Bear in mind one thing all the time; that the quotations of the legitimate stock exchange are followed in the "bucket shops." Stock exchanges have made strenuous efforts to prevent the installation of "" tickers in concerns of this kind, for if it were not possible for these establishments to get the stock exchange quotations, it would be difficult for them to exist. The curse of this sort of business is that it attracts men and women of very small means, often office boys and the like. It is one of the worst forms of stock gambling known and has done untold injury. The majority of "bucket shops" will advertise that stock can be actually delivered, but as nobody calls for delivery, except in rare cases, they can afford to purchase the stock through genuine brokers to fill the demand of such rare occasions. "Bucket shops" thrive best on a declining market, for it is natural for the average person to buy stocks in anticipation of their advance in value; or, in other words, the majority of customers wager that stocks will go up. Therefore, a falling market causes the "bucket shop" to win more of its wagers than a rising market. The magnitude and power of this unwholesome business, centring in New York, is emphasized by the knowledge that at times the daily transactions are almost as large as that reported on the New York Exchange itself. The impression is growing that a large percentage of this business is in the control of a few unscrupulous men commanding enormous financial resources. Under their management the tentacles of this business are reaching out over the country in the shape of branch offices, from which points orders are received at the common centre. Suppose, for example, one of these heavily financially backed concerns finds that it has "orders to buy a very large number of shares of a given stock. Technically, they are "short" of that stock. It is perfectly feasible for them to go into the market and offer a large block of the same stock for sale, and break the price sufficiently to wipe out all the margins on orders in hand. Stratagems of this kind must be done by the "bucket shop" indirectly, as legitimate stock exchanges do not countenance members accepting orders directly from "bucket shops.' Building and Loan Associations. A form of bank incorporated under the laws of many of our States which has experienced a rapid growth. They are to encourage the accumulation of money on the part of those of limited means, for the erection of buildings, making improvements on lands, payment of encumbrances thereon, and, in a general way, to encourage real estate investments and the owning of homes and the saving of money. One joins an institution of this kind by becoming a subscriber to one or more shares, of an ultimate value of generally-$200; that is, obliging himself to pay a stated sum in fixed periodical instalments, say monthly; upon the failing so to do he must suffer certain prescribed penalties. He agrees to make these payments until the shares reach the stated value, when they become, as it were, fully paid; his proportion of the earnings of the institution, going to his credit, helps bring his shares to the "fully paid" requirements. A shareholder is entitled to borrow money upon real estate from the "association," when it has any on hand to loan, up to the face value of the shares held. Not only must he pay the legal rate of interest, but a slight premium besides. Formerly the loanable money was offered to the shareholders at stated intervals, and awarded each time to the best bidder, but now the plan of fixing the premium has been more generally adopted. Some of the" associations" will loan to members upon their shares as collateral, up to a certain percentage (say 90%) of the amount paid in. After all the required payments have been made upon shares, a subscriber may demand a return of his money, plus his share of the earnings of the "association." The magnitude of the money invested in this country in institutions such as above, may be appreciated from the following figures furnished by the Secretary of the United League of Building and Loan Associations: Total assets (1919-1920), $2,126,620,390; membership, 4,289,326; these returns relating to 7,788 associations. There are various institutions such as Savings Fund and Loan Associations, Mutual Loan Associations, Corporative Savings and Loan Associations, Homestead Aid Associations, Corporative Banks, etc., but for all practical purposes their intents and aims are substantially the same as the" Building and Loan Associations." These associations are divided into what are called "local" and "national." For obvious reasons it is better to invest in those of the former class. The first institution of this kind in the United States was at Frankford, Penn., in 1831, although in England these associations have been traced back to as early as 1789.1 Associations of this type have proved a great blessing to the wage earners of this country, and the blessings do not end there; the community at large is a gainer in more ways than one. It is conceivable that civil strife in this country may be restrained from the very fact that such a large number of people of limited means have become property owners. Building and Mutual Loan Associations. See "Building and Loan Associations." Building Mortgage. See "Mechanic's Lien." Bulge. A small but sudden advance in prices. Bull. One who believes that conditions are ripe for an advance in prices, or one who desires such an advance, and talks "bullish" accordingly. One may believe that the price of a certain security is about to advance, and, therefore, is said to be a "bull I on that particular security, whereas, he may not necessarily be a "bull" on others. One writer defines a "bull as 'a man who has something to sell... consequently he is anxious for prices to go up that he may do so at a good price. Bull Account. (First read "Bull.") All those who are interested on the bull side of a particular security, or of the market in general. Bull Campaign. An organized attempt to force up the prices of one or more stocks for the purpose of selling out on the advance. Bull Clique. Those whose interests lie in the direction of an advance in price of one or several securities, or market prices 1 1 Department of Commerce and Labour, Bulletin No. 55. |