Curbstone broker

The phrase curbstone broker or curb-stone broker refers to a broker who conducts trading on the literal curbs of a financial district. Such brokers were prevalent in the 1800s and early 1900s, and the most famous curb market existed on Broad Street in the financial district of Manhattan. Curbstone brokers often traded stocks that were speculative in nature, as well as stocks in small industrial companies such as iron, textiles and chemicals (see curb trading). Efforts to organize and standardize the market started early in the 20th century under notable curb-stone brokers such as Emanuel S. Mendels.

The New Board was an organization of curb-stone brokers established in 1836 in New York City to compete with the New York Stock and Exchange Board. The first local rival of the NYSE, the New Board emerged among the rough and tumble conditions of the very speculative curb-side trading during the down-turn in the market in general. The "curb" or "outside" trading the exchange used a system in which "brokers and dealers traded directly with each other in the street near the exchange." To compete, the NYSE quickly began offering a second daily opportunity to buy or sell securities. At first, the New Board was very successful. It remained larger than the Big Board until 1845, but the New Board’s brokers were "crushed" by the Panic of 1837 and the recession that followed, and it folded in 1848.

Curbstone brokers often traded stocks that were speculative in nature. With the discovery of oil in the latter half of the 19th century, even oil stocks entered into the curb market. By 1865, following the American Civil War, stocks in small industrial companies, such as iron and steel, textiles and chemicals were first sold by curbstone brokers. In August 1865, a reporter described the curb market in front of the new exchange building on Broad Street. "There were at least a thousand people on the sidewalk and street... Buyer and seller, speculator and investor, operator and spectator, agent and principal, met face to face, upon the curb and beneath the sweltering sun, opened their mouths wide and screamed all manner of seeming nonsense at each other".

The curb market grew further out of the Open Board of Brokers, previously in a building on New Street. Founded in part by former curbstone brokers, the Open Board of Stock Brokers was an early regional stock exchange established in 1864, which merged with the NYSE in 1869. After the Open Board joined the Consolidated Exchange, Open Board members specializing in unlisted stocks were left without "a roof over their heads and took to meeting casually in the course of the day in convenient lobbies in the district." The brokers were ousted by a number of buildings as their numbers grew, until they ended up in front of the Mills Building entrance on Broad Street.

The curb market moved to Broad Street near Exchange Place in the 1890s. Around 1895, leading curb-broker Emanuel S. Mendels began promoting the idea of the market moving indoors, an idea which wouldn't be actively picked up for two more decades. Efforts to organize and standardize the market started early in the 20th century under Mendels and Carl H. Pforzheimer. After decades of involvement in the curb exchange, Mendels became the recognized "proctor" of the curb, and he alone would decide on the quotation lists. He also used his influence to throw out fraudulent stocks and dishonest brokers. In 1904, Mendels began to organize the curb, in an effort to cut down on swindling and other problems. Also that year, Mendels published the first annual directory of reliable brokers. In the mining boom of 1905 and 1906, the Curb market attracted some negative publicity for the "wholesale use of the Curb for swindling." Around late 1907, Mendels as Curb agent began devoting most of his time to keeping the Curb market "free of swindling stocks." As of 1907, Mendels gave the brokers rules "by right of seniority," but the curb brokers intentionally avoided organizing. According to the Times, this came from a general belief that is a curb exchange was organized, the exchange authorities would force members to sell their other exchange memberships.

The curb brokers had been kicked out of the Mills Building front by 1907, and had moved to the pavement outside the Blair Building where cabbies lined up. There they were given a "little domain of asphalt" fenced off by the police on Broad Street between Exchange Place and Beaver Street, after Police Commissioner McAddo took office. As of 1907, the curb market operated starting at 10'clock in the morning, each day except Sundays, until a gong at 3 o'clock. Orders for the purchase and sale of securities were shouted down from the windows of nearby brokerages, with the execution of the sale then shouted back up to the brokerage.

This page was last edited on 29 April 2018, at 21:13.
Reference: under CC BY-SA license.

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