It would be impossible to describe the consternation which took possession of the German bourses as this dishonest way of resisting settlement increased, and it would require much space to show how it has paralyzed business in the great international securities. As the confusion and uncertainty grew, the great banks of Berlin determined to make a united effort to remedy it. Early in September, 1901, they announced that they would have no more dealings with unregistered firms and individuals after October 15, hoping thus to compel bankers and brokers throughout the empire to register. Provincial houses, however, resisted this demand, pointing out the impossibility of inducing their customers to register; thus the latter could at any time raise the difference plea against them, while they could not do so against the Berlin banks which executed their orders; consequently the provincial houses would be ground between the upper and the nether millstone. However, the vigorous action of the organized banks of Berlin greatly increased the number of firms on the "Register," particularly Berlin firms. On October 15, then, the great banks ceased all dealings with unregistered houses. It needed only a few weeks, however, to demonstrate that the plan could not be carried out, since it was found to be almost equivalent to the complete retirement from a brokerage business in the standard international securities on the part of the banks. Hence, on November 10 they abandoned their effort, and resumed transactions with unregistered firms. The prohibition of time-bargains in industrial shares was not in the government's program of Bourse reform; it was put into the bill by the Reichstag at the instance of the coal and iron companies whose stocks were listed for transactions in futures. The argument put forward by the companies was that such trading subjected their shares to undue rises and falls, besides exerting a deleterious influence upon the even course of their business. This view flatly contradicts the opinion prevail ing in Bourse circles, which is that dealings in futures tend strongly toward steadying values; and proof of this is frequently found by German financial authorities in the violent fluctuations of Wall-street quotations. As the prohibition in question affected only seven industrials, it may ap pear to the foreigner that undue prominence has been given to it by German writers when stating the evil effects of the law. It should therefore be mentioned that the shares affected were those of the largest coal and iron companies, whose variations had set the pace for this department of the market. The abolition of time-dealings in grain and other agricultural product was also against the will of the government, which clearly recognized the economic advantages of such transactions. It will interest the American reader to learn that the arguments made in our Congress against grain futures were extensively cited in the Reichstag by the Agrarians for suppressing them in Germany. Notwithstanding the resistance of the government, the amendment embodying the prohibition was voted by an enormous majority (204 against 39); and so the German farmer got what American farmers formerly demanded as the greatest possible boon that Congress could bestow upon them. It is therefore important for our farmers to note the sequel. When it became necessary to reorganize the produce section of the Berlin Bourse a conflict arose between the brokers and the Prussian Minister of Commerce in regard to giving seats in the governing committee of this section to five prominent Agrarians who were not even members of the exchange. The minister had the legal right to do this; but as his selections fell chiefly upon agriculturists who had made themselves particularly obnoxious to the Bourse by their wild denunciations, the brokers saw in his action the evident intention not only to place watchmen over them, but also to humiliate them in doing so. The brokers were already much embittered over the prohibition of futures and the anticipated derangement of the trade; so they broke into open revolt, dissolved their organization, and set up a sort of irregular trading in another place. Here they resumed time-dealings, omitting all features which the law laid down in its definition of "Bourse transactions for future delivery," like fixed quantities and fixed periods of delivery. These details. were left to be settled by the dealers themselves. Such trading went on for a time unmolested, but later the Berlin police nailed up the building in which the dealers met, declaring it to be a bourse in the sense of the law; and the courts sustained them. The dealers then rented an old abandoned hospital, erected stalls in it, and effected their transactions by circulating from stall to stall with their samples. The necessary close personal contact was thus preserved in a way; but the grain trade of Berlin had lost its efficiency, being disorganized and without authoritative quotations. From the moment that the produce section of the Bourse quit their old quarters there was an interregnum in the grain trade of the country; the modern method of produce dealing was virtually abolished. What was the result? The "Eldest of the Merchants" say in their report for 1900: "At nearly every one of our meetings, at the beginning of the Bourse interregnum, we had to answer inquiries from the commissary departments of army and navy, from railway managements, municipal administrations, statistical offices, etc., for trustworthy grain prices; but we were only able to answer that we did not know." The report goes on to show that interests through the lack of a produce exchange with universally accepted quotations for grain. Hence the Minister of Commerce opened negotiations with the seceded brokers several months after the dissolution of their organization, looking toward reëstablishing it. These negotia tions were continued for nearly three years before all parties were ready to bury the hatchet, which was done in January, 1900; and the brokers returned with more than half a victory to their old hall. Even the Agrarians had come to recognize the necessity of a produce exchange, for they had bitterly felt the lack of authoritative quotations. True, they still had the liberty to sell their crops in advance of delivery; but they found that they were unable to do this advantageously without quotations recognized by all interests, and without some board of appeal for settling disagreements as to grading. It is a highly significant fact that one of the chief reasons influencing the government to reopen the Produce Bourse was supplied by the Minister of War, who pointed out that, owing to the ruin. of the grain trade, there would be no large dealers in times of war who could undertake the immense contracts that the ministry would then have to place; the commissary department would have to buy from hand to mouth at high prices. Drawn by Werner Zehme. Half-tone plate engraved by J. W. Evans A TELEPHONE CALL the only persons getting any advantage from the extinction of the Produce Bourse were the provincial dealers, who charged higher premiums for their increased risks growing out of the lack of Berlin quotations. In other words, they paid less to the farmers and asked higher prices from the millers. The government at once recognized the disadvantages arising for all business The Produce Bourse was accordingly reopened on April 2, 1900. The government conceded to the dealers the right to Drawn by Werner Zehme. Half-tone plate engraved by C. W. Chadwick The names of the brokers are affixed to the benches. resume dealings for future delivery and to publish time-quotations. The brokers, on their part, agreed to accept five Agrarians on their governing committee, who, however, were to be selected by the "Eldest of the Merchants" from a list of ten submitted to them; but, in practice, this turns out a barren victory for the Agrarians, and they rarely appear at the sittings of the committee. Equally barren is another point conceded to the Agrarians. They demanded that the words, "For actual grain," should be printed upon the sales Almost all brokers have such a seat somewhere on the floor. notes of the reorganized exchange, as a safeguard against "paper wheat. Thus the great Agrarian storm was laid with a phrase. For what is to prevent two dealers from settling the difference between the contract price of their transactions and the spot price at the time of delivery? As a matter of fact, grain speculation between professional operators goes on now in Berlin about as freely as ever; the only marked difference is that the outsider element is wholly shut out. Such are the main features of Germany's Drawn by Werner Zehme. Half-tone plate engraved by J. Tinkey ARRANGEMENT OF THE "KÜNDIGUNGSZIMMER," OR NOTICE-ROOM, NOW ABOLISHED The "Kündigungszimmer" was formerly attached to the produce section of the Bourse, but ceased to exist with the prohibition of futures and the closing of this department in 1897. Here official notice was given of the expiration of contracts. The placards suspended in three circles above the writing-tables contained the names of the interested firms. from month to month with little expense, till a favorable opportunity for profit-taking presented itself. Owing to the present high cost of prolongation, however, this carryover business has vastly shrunk in volume, and these securities are traded more and more for cash. This naturally makes heavier demands for money; and as few purely brokerage firms operate with a large capital, such business is rapidly passing into the hands of the strongest Berlin banks. The high stamp gives these institutions another marked advantage, since buyers prefer to send their orders where they can hope to get them filled by "matching," and thus save the tax. marked in the financial press that London agents located in Germany get good orders even in times when business on German bourses is utterly stagnant. The prohibition of time-bargains in industrials has put all the business in this department upon a cash basis, and has thus further swollen the brokerage operations of the huge joint-stock banks. Has the prohibition given greater steadiness to quotations? The general opinion among brokers is that values have fluctuated more abruptly under the Bourse law than ever, and figures have been printed which seem to confirm this view. At least, it is certain that the years 1897-1900 brought the most |