Note A — Chapter VI · THE FATE OF THE WALL STREET BEARS.

That section of the Exchange where stocks are loaned and borrowed. Transactions of this kind are made necessary by “bear” or “short” dealings. An operator, for instance, “sells short” 100 shares of Union Pacific at 28. He does not possess the stock which he has sold; therefore he must borrow it for delivery to the purchaser before the close of business that day. The rate charged for such stock loans is usually very small, but it sometimes happens that stock is “oversold” or the supply is limited, and in that case the “bear” may have to pay a round sum to obtain the shares he requires to complete his contracts. The “bear’s” profit or loss depends on the future course of the market. In the case mentioned, if Union Pacific rises to 30 and the “bear” closes his speculation at that figure, that is, if he buys 100 shares in the market to repay his loan, he loses $200. On the other hand, if the price drops to 26 and he buys the necessary 100 shares at that quotation, he makes a profit of $200.