Bah! I feel like an idiot. A couple of specific points that I'm stuck on:
a. Why would a big decrease in the surplus reserve be a conventional excuse for big room traders to jump on the market?
b. What does he mean when he says "shake out some of the weak commission-house accounts?"
c. What would the "usual reactions" be? The market would drop at the end of the day?
d. Why would the shop be glad to see short selling between them?
e. How is he catching the suckers both ways?
here's the context and the answer to your questions is at the end.
""The only way I can hit any of these short sports is
through their pocketbook. I can't touch him in St. Louis just
now, but some day I will." And I told McDevitt my grievance.
"Well," says old Mac, "he tried to connect here in New York
and couldn't make it, so he's opened a place in Hoboken. The
word's gone out that there is no limit to the play and that the
house roll has got the Rock of Gibraltar faded to the shadow of
a bantam flea."
"What sort of a place?" I thought he meant pool room.
"Bucket shop," said McDevitt.
"Are you sure it's open?"
"Yes; I've seen several fellows who've told me about it."
"That's only hearsay," I said. "Can you find out positively
if it's running, and also how heavy they'll really let a man
trade?"
"Sure, sonny," said McDevitt. "I'll go myself tomorrow
morning, and come back here and tell you."
He did. It seems Teller was already doing a big business
and would take all he could get. This was on a Friday. The
market had been going up all that week -- this was twenty years
ago, remember -- and it was a cinch the bank statement on
Saturday would show a big decrease in the surplus reserve.
That would give the conventional excuse to the big
room traders to jump on the market and try to shake out some of
the weak commission-house accounts. There would be the usual
reactions in the last half hour of the trading, particularly in
stocks in which the public had been the most active. Those, of
course, also would be the very stocks that Teller's customers
would be most heavily long of, and the shop might be glad to see
some short selling in them. There is nothing so nice as if
catching the suckers both ways; and nothing so easy with
one-point margins.
That Saturday morning I chased over to Hoboken to the
Teller place. They had fitted up a big customers' room with a
dandy quotation board and a full force of clerks and a special
policeman in gray. There were about twenty-five customers.
I got talking to the manager. He asked me what he could do
for me and I told him nothing; that a fellow could make much
more money at the track on account of the odds and the freedom
to bet your whole roll and stand to win thousands in minutes
instead of piking for chicken feed in stocks and having to wait
days, perhaps. He began to tell me how much safer the
stock-market game was, and how much some of their customers made
-- you'd have sworn it was a regular broker who actually
bought and sold your stocks on the Exchange and how if a man
only traded heavy he could make enough to satisfy anybody. He
must have thought I was headed for some pool room and he wanted
a whack at my roll before the ponies nibbled it away, for he
said I ought to hurry up as the market closed at twelve o'clock
on Saturdays. That would leave me free to devote the entire
afternoon to other pursuits. I might have a bigger roll to carry
to the track with -- if I picked the right stocks.
I looked as if I didn't believe him, and he kept on buzzing
me. I was watching the clock. At 11:15 I said, "All right," and
I began to give him selling orders in various stocks. I put up
two thousand dollars in cash, and he was very glad to get it. He
told me he thought I'd make a lot of money and hoped I'd come in
often.
It happened just as I figured. The traders hammered the
stocks in which they figured they would uncover the most stops,
and, sure enough, prices slid off. I closed out my trades just
before the rally of the last five minutes on the usual traders'
covering.
There was fifty-one hundred dollars coming to me. I went to
cash in.
"
-----------------
the decrease in reserves means that they will jump on the maket to push it DOWN - so short it and then after they shake out all the little traders who only have a 1 point margin they ramp it back up.
Jesse anticipates this
sells
covers his shorts and closes out before the rally to the bell.
