Stock_Exchange

Stock Exchange, a market for the purchase and sale of all descriptions of negotiable securities (see Market). In the immense majority of cases the securities so dealt in are what are known as "stocks, bonds and shares," on which interest, or dividend, is payable when earned; but bills issued by governments and municipal corporations are also occasionally dealt in. Many years ago, when the British government was in the habit of issuing exchequer bills, a now obsolete form of security, these bills were quoted in the official list of the London Stock Exchange; this was possible because though nominally bills, they were really bonds with a variable rate of interest fixed halfyearly in advance by the treasury. The inconvenience of this arrangement led to their being abandoned as a portion of the system of British government finance. Markets for dealing in securities have existed for some hundreds of years. Their organization was loose, there was no specific body of persons forming the market, and there were no special rules governing their procedure until within the last hundred and fifty years.

## London

Previous to 1773 the London stockbrokers conducted their business in and about the Royal Exchange, but in that year, having formed themselves into an association under the designation of the Stock Exchange, they, after temporarily locating their headquarters in Sweeting Ally, Threadneedle Street, removed to Capel Court, Bartholomew Lane. The growth of business necessitating improved accommodation, a capital of £20,000 in four hundred shares of L50 each was raised in 1801 for the purpose of erecting a new building in Capel Court, which was finished and occupied in the following year, the members at that date numbering about five hundred. With the occupation of the new building new rules came into force; all future members were admitted by ballot, while both members and their authorized clerks were required to pay a subscription of ten guineas each. As only the wealthier members of the association had provided the capital for the new building, the Stock Exchange henceforth consisted of two distinct bodies - proprietors and subscribers. In 1854 the membership having increased to about one thousand persons, an extension of the premises in Capel Court was effected at a cost of £16,000. A very extensive increase in the accommodation was made in 1885, when what was for many years afterwards known as the "new house" was erected. It occupies by far the greater portion of the triangular area of which Throgmorton Street, Bartholomew Lane, part of Threadneedle Street and part of Old Broad Street form the sides. Sections of the external parts of this area are in the hands of banks, insurance companies and other places of business, but most of the south side of Throgmorton Street and most of the north side of that portion of Old Broad Street which lies between Throgmorton Street and Threadneedle Street are Stock Exchange premises. Since 1885 various alterations in the use of the space available have been made, but there has been no considerable extension to the building. A portion of the share and loan department occupies premises in Austin Friars.

The Stock Exchange site and buildings are the property of the holders of the share capital in the company called the Stock Exchange (Limited), which is under the control of nine "trustees and managers," who are appointed by the shareholders. There are now 20,000 shares of unlimited amount on which X1 2 has been paid up; subscriptions of members and their clerks, from entrance fees paid by new members, and from rents and investments.

The business and discipline of the Stock Exchange is under the control of the "committee for general purposes," shortly known as "the committee." This body is composed of thirty persons, and is elected annually. It is entirely distinct from the "managers." The committee, when called upon, settles disputes between members and sometimes between members and their clients. It does not move in any matter until this is brought to its notice, and even then it frequently declines to act. It does part of its work through sub-committees, but all questions are finally settled in full meeting. Its powers are very wide, ranging from the granting or refusing of a quotation to a. new stock, to the expulsion of a member, and the suspension of a "special settlement," as well as such trifles as reprimanding young members overburdened with animal spirits, and the closing of the "house" for holidays other than those provided for by the rules. The committee has an enormous amount of routine work to do or superintend; the "official list" of prices and the marking of "business done," for which the share and loan department is responsible, is supervised by it; the "official assignees," who are appointed to deal with the assets of defaulting members, act under the orders of the committee.

Membership of the Stock Exchange is for twelve months only; everyone without exception who wishes to remain a member must be re-elected annually; the year ends on the 25th of March. New members may be elected, (a) by the nomination of a member who retires in favour of the new member, or of a former member, or of the legal personal representative of a deceased member. The candidate must be recommended by three members, who also become sureties for him during the first four years from the date of his admission for £500 each. (b) A certain number of admissions are made each year, without nomination, of candidates with two sureties; under this. arrangement clerks who have completed four years' service are admitted.

Since the 23rd of November 1904, every member has been obliged to become the owner of at least one share in the Stock Exchange (Limited). This arrangement is the outcome of the long-standing controversy respecting the "dual management" of the Stock Exchange, the managers and the committee being, as already explained, independent authorities. The arrangement is, no doubt, anomalous, but it has worked efficiently. Its principal drawback is the fact that, as the managers are proprietors and represent the body of proprietors who were, and still are, a minority of the members, they may be unconsciously biased in favour of increasing the number of members,. since the dividends on the Stock Exchange shares are derived from this source. In 1904 the number of members had become, temporarily, at any rate, too great, relatively to the business to be done by them, and it was decided to introduce the principle of limitation, not directly, but by the methods briefly described above. It is hoped that, if the shares are all gradually distributed among the members, the slight difference between the interests of the managers and the rest of the Stock Exchange will disappear. The plan adopted involves of course the difficulty that it may not be easy at all times for a candidate to obtain his qualifying shares except at a high price. The new system, however, appears to work well.

The London Stock Exchange is remarkable for having developed spontaneously a special mode of doing business, namely the differentiation of members into jobbers and brokers. A jobber is a member of the Stock Exchange who, according to the rules of that body, does business only with other members, as opposed to a broker who does business with the public as well as with his fellow members. Any member may at any time make known his intention to act as either jobber or broker, but he must not act as both simultaneously. The business of a jobber (who is. sometimes called a dealer) is to be prepared to "make prices" and deal in certain classes of securities selected by himself, in which he causes it to be known that he is a jobber. He thus.

no one person may hold more than 200 shares, and only members of the Stock Exchange can hold shares, except in the case of the representatives of proprietors who acquired their shares before the 31st of December 1875. When a proprietor dies his shares must be sold to a member within twelve months of his decease. As the dividends are handsome, there is rarely any difficulty in finding a buyer for such shares. The income of the company is derived from the annual becomes a jobber in "the American market," or in the "South African market," or in the "Consols market"; or in any other market which he chooses. At the beginning of his career he usually has to rely for business on such friends as he has made in the house, while serving his time as a clerk to a broker; but if he shows ability for the work he soon becomes known to a wider circle and may eventually make for himself a position of considerable importance in the house. A jobber's method of doing business is simple in appearance. All he has to do is to remain in or near that portion of the Stock Exchange where other jobbers in the class of stocks he is concerned with congregate, during the greater part of the day, and wait for brokers to propose transactions to him. If he is in the Home Railways market and a broker tells him that he wants to deal in, say 1000 "Easterns," meaning Great Eastern ordinary, he replies that they are 80 to 804 7 or whatever the price is at the moment; this means that he will sell at the higher and buy at the lower of these prices the amount of shares mentioned, not knowing "which way" the broker wishes to operate. On the latter saying that he will sell, or buy, as the case may be, the bargain is made, and is noted by both parties in memorandum books for completion at the next "settlement." The broker is understood to be, and usually is, acting for a client outside the house, and is paid for his trouble by a brokerage fixed by rules and paid by the client. The jobber's profit consists in the "turn," that is, the difference between the two prices quoted. But it is obvious that the realization of this profit by the jobber depends on his being able to effect a counter-sale, or purchase, with some other broker in 1000 "Easterns," and it is in so fixing the prices he quotes that, on the average of the day's or fortnight's transactions, his book shows a balance on the right side that his ability is displayed. If he has sold the stock and has not got it on his books already, he must procure it by the next settlement in order to deliver it; if he cannot procure it he must borrow it (backwardation). If he has bought it he must pay for it by the next settlement, and should it have gone down in the interval he will evidently have made nothing on the transaction, so far as that settlement is concerned; he will have the stock "on his book" and will have to carry it over (contango) and wait till someone wants to buy it of him in order to "undo" the bargain. If he is possessed of capital he may pay for and hold the stock until its price has risen considerably, but as a rule a jobber tries to make quick profits. A jobber is not obliged to make a price, and in times of serious trouble the weaker ones among them refuse to do so, or merely stay away. A jobber has another defence against the risk of making a bargain which he thinks he will not be able to "undo" promptly; he can quote a "wide" price, that is, he could quote for I 000 "Easterns" "792-84" a price no broker would be likely to deal at. The extent of a jobber's business depends on the reputation he has acquired. Good brokers, in their own as well as their client's interest, always "pick their man," especially in times of danger and difficulty. A broker may be acquainted with several men in a particular market any one of whom he considers quite safe to deal with in ordinary times, but he will be very careful whom he chooses to execute an order with, when, owing to money being dear, or for some other reason, markets are "bad." The usefulness of the jobber has from time to time been denied by critics, who have pointed out that in other stock exchanges no differentiation of members into brokers and jobbers has taken place. It has also been alleged that his "turn" is too easily earned, which is not true, and that it is often too large; as to the latter statement, it may safely be said that no jobber who habitually quoted prices which were too "wide" would get much business.

Since 1900 a controversy has arisen as to the propriety of jobbers dealing direct with members of country stock exchanges, and of brokers dealing direct with financial houses with known to have certain shares to sell. The difficulty as regards the latter chiefly affected the mining share market. It may be argued that both parties .are wrong according to the letter of Stock Exchange law, but their action can be defended. The broker who goes for a particular share direct to a financial house (colloquially called "the shop") may get better terms for his client, and though he also gets a second commission for himself, provided he makes known this latter fact to the client, the transaction is an innocent one. The jobber's action in regard to provincial stock exchanges, known in Stock Exchange slang as "shunting" business, may be regarded as a rough compensatory operation for loss of business he may incur through the broker's desertion of him for the financial houses. The quarrel would not have arisen but for the great increase in the members of the Stock Exchange and the fact that business during and for some years after the South African War was insufficient to give a living to so many competitors for it.

The hours of business on the Stock Exchange have varied little since the early days of the institution. They now begin at i i a.m. and end at 3.30 p.m. on ordinary days except Saturday, but the house remains open until 4 p.m. On Saturdays the closing hour is 1.30.

During the settlement (see Account) the house is kept open till 4.30 p.m. Bargains are "marked," that is, the prices at which they are "done" are recorded in the official list, between II a.m. and 3.30 p.m. on ordinary days, and r i a.m. and i p.m. on Saturdays; the marking of a bargain is effected at the request of the broker who made it; whenever investment purchases are made a large proportion of them are usually marked, as brokers like to be able to show that they did the business at the price stated in the "contract note" sent to the client. The amount of trouble a broker takes for a client is not always realized. An investment order gives much more trouble to a broker than a speculative order. In the former case the broker after arranging the purchase or sale has to perform various operations before the whole transaction is complete. He has to procure transfer forms, get them properly signed and witnessed, obtain the certificates, if the security dealt in is registered stock or shares, or the bonds if the security is "to bearer." There may be delay in the delivery of securities bought for which he is not responsible, but for which he may be blamed by an inconsiderate client. In cases of serious and unreasonable delay a broker has the drastic remedy open to him of calling upon the officials of the "buyingin and selling-out department" to buy the stock at whatever price may be necessary, the other party, that is, the jobber with whom he dealt, paying any difference between the agreed price and the price at which the security was "bought-in." Inscribed stock may be bought in on the day following the day specified for delivery of it. Bearer securities not punctually delivered may, in some cases, be bought in on the day they were due for delivery. Similar rules apply to unreasonable delay in payment for securities sold, which may be ended by a demand that the stock shall be ,"sold out." These rules are intended for use in extreme cases, and are not often resorted to.

Every bargain which a broker executes for a client is understood to be "for the account," unless otherwise specified; that is, the completion of the bargain is understood as intended to take place on the next "settling day." There are two settlements in securities generally, and one in consols and British government securities, India stock, &c., each month (see Account). The interval between two settlements varies from 12 days to 19 days, but the normal interval is 14 days, and the settlement is usually spoken of as "the fortnightly settlement" or "account." In most securities it would not be easy to deal "for money," that is, to obtain cash or stock on the day of the transaction; but this can always be done in consols and other British government securities; "money" bargains in these are sometimes very numerous. Of late the practice of dealing in consols for next ordinary (not consols) account has become fairly common, and is now recognized officially.

All bargains for sale or purchase of stock are supposed prima facie to be investments, that is, the form of contract is the same in all cases. But if a client has bought or sold speculatively he will when the settlement arrives either "close the account" by effecting a sale, or purchase, of the stock he has operated in, or he may request his broker to "carry over" the bargain or "continue" it until the next account. This operation may be repeated as often as p y p  the client chooses, provided the broker is ready to give the required facilities. But the broker is under no obligation to carry over, and in times of difficulty, when money is dear, or politics threatening, he would very likely decline to do so. Since about 1890 an increasing number of speculative transactions have been effected in a manner which disguises their real character; the security is, to all appearance, bought and paid for in the Stock Exchange, but the client has, as a matter of fact, obtained the money by "pawning" the security with a bank. For many years the relations between the Stock Exchange and the money market in its wider sense (see Market) have been becoming closer; banks now lend more freely than they used to, and on a wider range of securities; but they also lend more often direct to the holder of the securities borrowed on, and not through a member of the Stock Exchange. Formerly the usual practice of those banks which had considerable business with the Stock Exchange was to lend large sums on high-class stocks to wealthy brokers, who employed the money inside the house in carrying over the accounts of their clients, or to other brokers whom they trusted. This class of business is still very large, but clients are not now always satisfied to borrow through their brokers; they not infrequently go direct to banks and borrow from them. This practice has its inconveniences: formerly it was possible for the jobbers in all important markets on the Stock Exchange to form a good idea, by comparing notes at each settlement, of what the condition of the speculative account really was, but it is less easy to do so now, because so much stock is "pawned" with banks that the conclusions arrived at by the jobbers from examining only what they are carrying over themselves are liable to be falsified through their finding (a) that the account is either lighter than they expected, stock having been taken off the market temporarily, by means of loans obtained from banks; or (b) that it is much heavier than they were prepared for, the banks having suddenly refused to lend any longer on a mass of stock they had hitherto been carrying. Banks are apt to be more capricious in their action as regards this class of business than the big "money brokers"; they cannot so well feel the pulse of the market, and are therefore liable to sudden fits of alarm, and also to hurried changes of policy on the part of their boards, which may be, and usually are, based on sound principles, but are not infrequently carried out without sufficient' regard to the circumstances existing at the moment chosen for putting them in practice.

Speculative dealings sometimes take the form of "options." An option is a right to buy or sell a specified quantity of a speci-. fled security at a certain price, within a specified period; for this right a sum of cash is paid which is usually quoted as a percentage on the face value of the security. Having paid this sum the purchaser of the option watches the market during the period fixed; if a rise or fall sufficient to show a profit occurs he sells or buys an amount of the security equal to that bargained for in the option contract and informs the broker with whom he "did the option" that he "calls" the security from, or "puts" it on him. If no movement, or an insufficient movement, occurs in the price during the specified period, the "option" is "abandoned." This form of transaction is often a useful one for a business man, but attempts have been made to represent it as a "safe" way of making money on the ground that "risk is limited," and, as such, it has been recommended to inexperienced persons who are foolish enough to wish to speculate without comprehending the nature of speculation. Option dealings are neither more nor less "safe" than other speculative operations. Brokers who quote prices for an option always fix them at a level which will, on the average, make their own positions safe, and their clients, unless they are unusually acute and well informed, are not more likely to make exceptional, or any, profits than by the more usual speculative methods.

During recent years the volume of transactions in interestbearing securities has grown enormously in all the great cities of the world. In London the membership of the Stock Exchange, the number of securities quoted in the official list, and the number of securities dealt in, have expanded greatly, and the, markets in New York and Paris, especially the former, have acquired enhanced importance. The Berlin Bourse, the business of which was steadily growing during the 'eighties and early 'nineties, was checked in its expansion after 1 896 by drastic legislation passed in July of that year against bargains for future delivery, and much of the business of German speculators has been done since then in other exchanges, especially London, Amsterdam and Brussels, but it has grown nevertheless, and if the existing restrictions are removed will grow more. Communication between the various great cities of the world is much closer than it was before the telephone came into use; what is known as arbitrage business having attained very large proportions. This class of business consists in watching closely the fluctuations in certain securities which are dealt in in two big markets, and simultaneously selling in one and buying in the other. Previous to 1884 and 1885 it was chiefly confined to operations between London and Paris, the difference in the times of London and New York having up till then prevented the growth of a similar business between those cities, as New York morning prices do not reach London till about 3.15 p.m., and the London Stock Exchange is shut at 4 p.m. But in London, about the middle of the 'eighties, the practice of staying in "the street," after the Stock Exchange was shut, to deal in "Americans," began to become common, though many old-fashioned brokers set their faces against it. It is worth noting that in most of the foreign cities there has always been a disposition to stay later than in London, where it was formerly the rule to cease business definitely at a more or less fixed hour. Since 1885 there has been more laxity in this respect, but it is not even yet the practice to do business in the evening. In Paris, dealing "on the boulevard" goes on intermittently in summer as late as 9 p.m. when trade is active.

The market for mining shares had, up to about 1888, held a very small place in the business of the Stock Exchange, but the discovery of an extensive goldfield on the Witwaters rand in the Transvaal produced a great change. At first, although the transactions in the new group of securities were very large, and enormous sums of money were won and lost in them, the "Kaffir circus," as it was called, was regarded with contempt by the older habitues of the Stock Exchange, and it was not until the winter of 1894-1895, when the number of brokers engaged in the new market had become greater than those in any other, that special recognition was given to the mining department by a rule that the arrangements for carrying over bargains in mining shares should begin the day before the regular settlement commenced (see AccouNT). Even with these new facilities the Stock Exchange clearing house found it difficult to cope with the huge mass of work thrown on it in 1895, and once or twice it broke down temporarily. Much of the trouble to all concerned arose from the fact that mining shares, like nearly all securities dealt in in London, were "registered" and not "to bearer." The offices of the companies were naturally not equipped with the staffs that would have enabled them to furnish certificates promptly in the enormous quantities unexpectedly required: it must be remembered that the preparation of a certificate for 50 or Too shares of T each is just as troublesome as the preparation of one for 500 or 1000. The new feature, which upset all calculations, was the extraordinary number of small speculative investors who bought and paid for their shares, very often to their subsequent regret. If the shares had been "to bearer," the work could have been done with comparative ease.

Another remarkable feature of the "boom," to use the slang which came into general use during the great speculative mania for South African shares in 1895, was the fact that of the 200 or 300 shares dealt in, less than a dozen were officially quoted.

As a rule no quotation was asked for, though a "special settlement" was obtained. Most of the companies concerned had been registered under the laws of the then existing Mining Shares not South African Republic. After the Jameson raid Quoted business in the South African market slackened Officially. somewhat, and there were few new "Kaffir" com panies introduced; but the volume of mining transactions was kept up by the discovery of the Coolgardie goldfields of West Australia, which led to the creation of a great number of companies, whose shares were "introduced" in London from 1895 onwards. Very few of these also were, or are, quoted in the official list. A minor "boom" occurred in the winter of 1900-1901 in West African shares, but although it created a good deal of noise, it was not to be compared in magnitude to the South African and West Australian movements. The West African goldfields are expected by the best authorities to be very productive eventually, but are at present in an early stage of development.

Recent events have been very unfavourable to the South African market, which has ceased to attract the attention it met with before the South African War. Many jobbers have left it for other markets, and the volume of business in it is so small that the additional day granted for the settlement of bargains in mining shares is said by some to be no longer necessary. Though the older mining markets are comparatively quiet, some new ones have come into existence, especially that for Siberian, British Columbian and New Zealand properties. There has also been an attempt to establish a market for Egyptian securities, chiefly those of land and financial companies; an extraordinary speculation took place in Cairo during 1905-1906, and collapsed in the early part of 1907 with unfortunate results to those who financed it. In 1910 a rubber market became active.

## Paris

The Paris Bourse is an institution of enormous strength, but it plays a smaller part in international business than might be expected, owing to the deep-rooted conservatism and caution of the French people in money matters. It is true that they are liable to occasional outbursts of imprudence, such as led to the loss of great sums in the Panama Canal Company; but, as a rule, it is difficult to induce the average Frenchman to place his money in anything which he does not think a safe interestyielding security under French law: he almost always wants to invest, not to speculate. In Great Britain and America the distinction between the two is too frequently forgotten. Since the Panama collapse in 1894 the French investor - that is, the bulk of the French nation - has been very prudent. The French have gone on saving money, and have been very difficult to satisfy in the matter of the securities offered to them. Appeals to patriotism have drawn from some French capitalists a considerable amount of money from time to time for Russian government loans, but these appeals were backed by assurances given by large banking institutions like the Credit Lyonnais, the Comptoir d'Escompte, and the Societe Generale, in addition to the Bank of France, that the interest was secure. As a rule, investments outside France are not popular with the French peasantry and middle classes; but there has always been a minority ready to speculate from time to time, besides the body of professional operators on the Bourse. The dimensions of this minority increased during the last eight or ten years of the r 9th century, owing to the attractions presented by the South African goldfields. Operators and speculative investors in France were large holders of South African mining shares when the Boer War broke out in 1899, and though they sold them freely in consequence of the war, they did so with the intention of "coming in" again, and on more than one occasion made tentative purchases. The great banking firms and institutions of Paris have been occupied a good deal with the finances of Spain, Portugal, Egypt, Turkey and other minor countries. They are often large purchasers of British Treasury bills, which during the first two years of the South African War afforded an extraordinary opportunity to the investor, it being possible to buy them at prices yielding a rate equal to 34% per annum during the currency of the bills.

The Paris Bourse exists in virtue of the decree of the 7th of October, 1890, to regulate the execution of article 90 of the Code du Commerce and of the law of the 28th of March 1885, on marches a terme, as modified by the decree of the 29th of June 1898. Agents de change, who form the members of the official bourses in France, must be Frenchmen over twenty-five years of age, and must be in possession of civil and political rights. They are "nominated" by decrees countersigned by the minister of finance or the minister of commerce and industry. In a bourse possessing six or more agents de change a parquet may be formed, that is, a portion of the bourse may be railed off to which only agents de change have the right of entry, the rest of the bourse being known as the coulisse. A bourse provided with a parquet  elects a chambre syndicale, or committee, composed of a syndic and members varying in number according to the number of agents in the bourse. The maximum, when there are over sixty agents, is eight. In Paris there were only sixty agents de change  until 1898, but in that year the number was raised to seventy, owing to the volume of securities to be dealt with on the bourse having expanded considerably. The individual members are not, in law, responsible for any liabilities that may be incurred by fellow-members, but the practice is that the chambre syndicale meets the liabilities of any defaulting member. Each member owns what is called a charge, for which he has paid a sum varying from 1,500,000 fr. to 2,000,000 fr. (£60,000 to £80,000) to his predecessor by a private arrangement. In addition the new member must deposit 250,000 fr. (£10,000) as caution money, and 120,000 fr. (£4800) in the caisse commune  of the chambre syndicale. The agents de change have a monopoly of many kinds of legal business; they have various privileges denied to the dealers in the coulisse, as, for instance, the right to sell or buy certain securities for cash, the coulissiers being allowed only to deal for delivery at the settlement. The securities dealt in by the coulisse are known as valeurs en banque, and the coulisse  is often called the marche en banque. The agents de change are responsible for the production of the official price list of the bourse, but the coulisse also issues a list of its own. A much bigger business is done in the coulisse than in the parquet, the market for foreign securities being in their hands; many coulissiers are wealthy men.

All continental securities are "to bearer," and when it is desired to induce French capitalists to take an interest in British securities which are inscribed or registered, it has been found necessary to convert a part of the stocks into bearer bonds or shares. The fact that all securities are to bearer has led to special arrangements being made for guarding against the delivery of bonds to which the seller's title may be considered doubtful. A journal called the Bulletin officiel des oppositions  is published by the syndicat des agents de change, giving the designations and numbers of securities which have been frappes d' opposition, that is, whose currency on the bourse is temporarily stopped, either because they have been stolen or for other reasons. It is always necessary, before taking delivery in London of foreign bonds, to look through this list to see whether the bonds in question are included in it. Settlement (liquidation)  in Paris takes place twice a month; that at the end of the month lasts five days, and that in the middle of the month four days. French rentes are "settled" at the end of the month.

## New York

The New York Stock Exchange is a wealthy association consisting of members, who must be citizens of the United States, of twenty-one years of age or more. Their number cannot be increased except by the governing committee, which consists of the president, treasurer and secretary of the Stock Exchange, and forty members. There are twelve standing committees to deal with various departments of administration, the more important of these being the Admission, Arbitration and Clearing House committees.

Persons attain membership by election, or by transfer from a member who has died or resigned. Various dues and charges are payable by a new member. A member who is admitted by transfer pays an "initiation fee" of $2000 (£400). When a transfer is made the approval of the governing committee must be obtained before it can be completed. The person to whom the transfer is made pays a sum to the transferor for his "seat in the house," the amount of which is a matter of private arrangement; as much as $90,000 (18,000) has been paid for a "seat" when business is active, but when it is quiet the price falls considerably below this. A member may transfer his seat to his son (if the committee approve) without charging anything for it; but in all cases the transferee pays the above-mentioned initiation fee of $2000.

The gratuity fund is an arrangement for providing for the families of deceased members. Every member on election pays $ro to this fund; when a member dies an assessment of $ro is levied on all other members, and the Stock Exchange hands over $10,000 (2000) to the family of the deceased.

The New York Stock Exchange building is opened at 9.30 a.m., but business does not begin until ro a.m. The daily session continues until 3 p.m. No transactions must be Daily entered into before to a.m. or after p.m. (with 3 P certain exceptions) under severe penalties. The object of this is to enable all members to feel secure that no business has been done except within the official period, during which they are prepared to watch the market or provide for its being watched. Loans of money or securities, that is, what is called in London contango and backwardation business, may be arranged after 3 p.m. This latter provision is a necessary result of the settling arrangements on the Exchange.

Transactions may be: (a) for cash, in which case payment is made or stock delivered the same day; (b) " the regular way," i.e. the transaction is to be completed on the following day to that on which the bargain was made; (c) " three days," in this case the bargain must be carried out in three days; (d) in the case of options bargains may be made up to a limit of sixty days. If no time is specified when the bargain is made it is treated as being "regular way." It will be seen that these arrangements differ materially from those in London, Paris and Berlin, where business is done on the basis of fortnightly or, in the case of some classes of securities, monthly settlements. New York has a daily settlement for the bulk of its transactions.

All leading banking and finance houses in New York have one partner who is a member of the Stock Exchange and attends to the firm's stock business. All partnerships in which a member is interested must be disclosed to the governing committee, who have very wide disciplinary powers which they can use if anything is done which is contrary to the rules, or the spirit of the rules, of the Exchange.

The Exchange building is situated in Wall Street, and the Exchange is colloquially known as "Wall Street," just as the London Exchange is sometimes called "Throgmorton Street" or "Capel Court." It has in it accommodation including a telephone installation for each member and a large staff of messengers, &c., for their service. The Exchange has met in the past with difficulties of the same kind as have troubled the London Exchange. In 1898 it was found necessary to regulate the growth of direct dealings with provincial exchanges, which were held to constitute a breach of the rules relating to commissions. Dealing for "outside" exchanges of an irregular character was forbidden in 1896.

The New York Exchange is often the scene of gigantic speculative movements, and enormous sums are won and lost on it from time to time; but a huge investment business, or, at any rate, what is intended to be investment business, is done in Wall Street. Too frequently, however, the ideas of the purchaser as to what constitutes an investment are not very clear, and he finds that he has acquired a speculative article; this is inevitable in a country which still contains a good deal of dormant wealth which must sometimes be developed by new methods whose merits, when expressed in terms of capital expenditure, are not always as great as their enthusiastic authors imagined they would prove.

## Berlin

The business of the Berlin Borse is conducted under the strict regulations of the Imperial German law of the 22nd of June 1896, a measure which was intended to put a check on speculation in stocks and commodities in the supposed interests of the community. The term "Borse" is applied equally to the Ej f ectenborse (or FondsbOrse), that is, the "market for securities" (the Stock Exchange), and to the Warenborse in which commodities are dealt in. "Borse" is, in fact, a term equivalent to "exchange" as used in the expressions "stock exchange," "corn exchange," "wool exchange," &c. The brokers (Makler)  who carry on business at the Berlin Bourse are under the supervision of the Ober-President of the province of Brandenburg and the Ober-President of the city of Berlin, in accordance with the terms of the Maklerordnung fiir die Kursrnakler an der Berliner Borse, which was issued in the form of a decree (Dec. 4, 1896) of the ministers of trade and industry.

The Bourse opens at 11.50 a.m. and closes at 3 p.m. for official dealings, and a quarter of an hour before and half an hour after those hours for "unofficial dealings." The unimportant part which the Berlin Bourse plays in the world of finance, owing to the legislative shackles with which it is loaded, has led to a movement in favour of a reform of the law, which would give more freedom to legitimate speculation in commodities as well as in securities. (W. Ho.)