Friday, June 8, 2012

New York Stock Brokers: Probst, Wetzlar & Company


What firm cancelled its stamps with an oval with P. W. & Co. inside?  For several years I have had this stamp in my collection:

P. W. & Co.
JAN   19  1899
N. Y.

Then I acquired this block of four:

P. W. & Co.
JUN   18   1902
N. Y.

then David Thompson sent in this pair:

For all these examples, there are two possibilities for the originator of this cancel, with one being more likely.  The best known P.W. & Company brokerage firm in history is Paine, Webber & Co, which existed deep into the 20th century but was headquartered in Boston during the 1898 revenues period.

The other P. W. & Co. firm was Probst, Wetzlar & Co., a prominent New York-London arbitrage firm during the 1898 tax period.  Probst Wetzlar was headquartered in New York, and given that these cancels all include N. Y., I figured these were from Probst Wetzlar but needed proof.

And then an on-document example showed up in the form of a memorandum of sale, and mystery was solved:

Memorandum of sale for 100 shares of the Erie Railroad at 37 7/8 per share.  The hole in the middle possibly came from a clerk in the NYSE's clearing office putting the memorandum on a spindle.


Mr. Probst and Mr. Wetzlar in 1898:

Mr. Probst and Mr. Wetzlar made much of their money by trading on the differences in price for US stocks on the London and New York stock exchanges.  Probst, Wetzlar was an arbitrage brokerage house.   In a post from November 22, 2011 on the firm Ladenburg Thalman, I featured the work of arbitrage houses:

From King's Views of The New York Stock Exchange, page 20:

Meanwhile, the "arbitrage houses" have also been in close touch with their correspondents in London over the cable, and their clerks have been busy noting prices and coding orders and instructions. The "arbitrage houses" make a business of buying and selling between the two markets, according as a margin of profit offers itself by disparity in prices, and in active markets each house will send and receive many cables in a minute. There are about eight or ten of such houses, among whom L. von Hoffman & Co., Ladenburg Thalman & Co., L. H. Niles & Co., Probst, Wetzler & Co., and I. & S. Wormser are prominent. The principal arbitrage houses in London are R. Raphael & Sons, Leon Bros., Satterthwaite & Co., Huggins & Clark, and Borthwick, Wark & Co.

The houses just named make a business of dealing between the two markets. Suppose St. Paul stock [the Chicago, Milwaukee & St. Paul, or Milwaukee Road was known as the "St. Paul" in 1897] to be 93 1/2 "sellers" in London at 3 PM, while the first quotation in New York is 91 1/4. As all American stocks in London are quoted on an arbitrary basis of $5 to 1 pound, (i. e., $1 equals 4 shillings), the London quotation is equal to a quotation of 90.69 in New York (with exchange at 4.85), so that with the opening quotation of 91 1/4 the arbitrage house [Ladenburg Thalman & Co.], for example -- buys St. Paul in London at 93 1/2, and sells St. Paul in New York at 91 1/4/ There is a pure profit in the transaction of over 50 cents per share...

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