CORNER. A commercial term of United States origin, denoting the operation, or more properly the resultant effect, of acquiring contracts for the delivery of so much of a commodity or of the stock or certificates of indebtedness of a cor poration, as to raise abnormally the values there of to the advantage of the buyers. A corner is `effective' when those who have contracted to sell and deliver the stock or commodity are forced, for lack of other supply. to buy it. or the certificates or warehouse receipts represent ing it, from the buying or cornering pool, at the pool's prices. Conversely a corner is 'smashed' when the buyers, finding their means inadequate to their operations, are forced to throw their holdings on the open market, or when those who have contracted to deliver the stock or com modity are able to obtain it independently of the pool. For the latter reason, because the total supply is not strictly determinable nor all obtainable. attempted corners in wheat and other actual commodities arc seldom successful. On the other hand. corners in stocks and cer tificates having definite total issues may Ile car ried just to the point where they bankrupt the seller: that is to a point where, if the prices are put any higher, the sellers repudiate their contracts and the corner is 'smashed' for lack of a market. The possibility of any considerable corner arises from buying and selling on mar gin. In this usual and speculative form of stock-dealing the broker or commission house lends the buyer or seller the money needed for the deal, demanding, however, for his own pro tection, a deposit of five, ten, or twenty per cent. of the face value of the contracts made. The dealer is thus enabled to buy or sell stock to a value of from five to twenty times the amount of his actual capital, and a combina tion of large dealers can without difficulty buy or sell the whole stock issue of the largest trusts or railroads. lf, now, such a combination
sells, that is, agrees to deliver. practically the entire issue of a road, they may find when they attempt to buy the stock to fill their contracts that it is already held by the very persons to whom they contracted to sell it. That is, a rival combination has been secretly working against them, and the sellers of the stock are forced to buy the stock at exorbitant prices and then sell it back to those for whom they bought it. This is the process technically known as 'squeezing the shorts.' Until recent years nearly all corners of importance were manipulated for speculative reasons: for the immediate gain of the operators, that is, and without any investment purpose. Of such a nature was the famous gold corner, organized in New York by .Tay Gould and his associates. This corner, cul minating on "Black Friday,' September 24, 1869. was 'smashed' by the release of Govern ment gold by the Secretary of the Treasury— thus rendering the 'shorts' or sellers of gold independent of the cornering syndicate who held the gold which the 'shorts' had agreed to sell. Latterly, however, many corners or quasi corners have resulted incidentally. and often to the regret of all concerned, from the effort of rival combinations to buy the control of some large trust or railroad for permanent invest ment and administrative purposes. Of this kind was the earlier in the Northern Pacific Railroad in May, 1901, when the price of the stock rose abruptly to 1000 bid. For an account of the gold corner of 1869, consult: Bontwell, Reminis cences of Years in. Public Affairs (New York, 1902). For an interesting account of the actual manipulation of a corner, consult Frederic, The Market Place (London, 1899). See MARGIN DEALS; SHORTS; SPECULATION; TRUSTS.