STOCK-EXCHANGE 



735 



At the time the first stone of the Stock-exchange 

 building was laid in 1801 the total national debt 

 of Great Britain was some 550,000,000, and tlis 

 Stpck-excha'nge list, published bi-weekly, com- 

 prised only six securities, chiefly British govern- 

 ment stocks. Foreign governments first came to 

 the English market as borrowers in 1820 to 1825, 

 and the bonds of various European and American 

 states, Russian, Portuguese, Neapolitan, Danish, 

 Greek, Colombian, Mexican, Buenos Ayres, Chilian, 

 Peruvian, &c. , came to be dealt in. There were 

 also transactions in a few canal, insurance, and 

 industrial companies. Numerous banking corpora- 

 tions were established immediately after 1833. 

 The introduction of railways in the United King- 

 dom and on the Continent in the period from 

 1840 to 1846 added largely to the business of the 

 Stock-exchange. The gold-discoveries of 1848-50 

 brought about the formation of a crowd of mining 

 schemes. The introduction of joint-stock com- 

 panies after the Act of 1862, the growth of foreign 

 government debts, and the introduction of Indian 

 and colonial borrowings, municipal loans, gas, 

 water, shipping, telegraph, tramway, &c. under- 

 takings, as well as United States, Indian, and 

 South American railroad securities, have so added 

 to the official list of the London Stock-exchange 

 that the nominal amount of stock and securities 

 quoted in the list that appears daily under the 

 authority of the committee was at 31st December 

 1891 to the amount of 6,347,000,000, or, deduct- 

 ing foreign loans with coupons payable abroad, 

 4,562,000,000; and this is exclusive of an enor- 

 mous amount of capital of miscellaneous company 

 issues, which individually have not been of suffi- 

 cient importance to obtain a quotation in the 

 official list. These latter though not quoted are 

 dealt in. 



As regards the United Kingdom, beyond the Lon- 

 don Stock-exchange there are various provincial 

 establishment* for conducting business in public 

 securities. Manchester, Liverpool, Leeds, Birming- 

 ham, Bristol, Glasgow, Edinburgh, Dublin, Belfast, 

 and other important centres of the United Kingdom 

 have their stock-exchanges administered by com- 

 mittees, and having rules and regulations much 

 on the same lines as those of the great London 

 establishment. On the Continent, too, every im- 

 portant city has its stock-exchange or Bourse. 

 New York (about 1100 members in 1891), Phila- 

 delphia, Baltimore, Chicago, San Francisco, and 

 some other important American cities have their 

 stock-exchanges ; and there are also similar 

 establishments termed Balsas in leading cities of 

 South -American states. Transactions in public 

 funds and securities of joint-stock companies, &c. 

 are also conducted in leading Indian and colonial 

 cities. 



At the time when the London Stock-exchange 

 was opened in 1802 there were 551 members and 

 99 clerks, and in March 1891 the roll of members 

 included upwards of 3000 names, besides an artny 

 of clerks having admission. In 1821 each member 

 was required to provide two sureties for the sum 

 of 250 each, who also had to be members, and 

 were held liable in their suretyship for two years. 

 Various alterations have since been made, and the 

 suretyship for new members is now three mem- 

 bers resiioiisilile for the sum of 500 each for 

 fonr years. Those persons who have served as 

 clerks for a period of four years are, however, 

 only called upon to provide two sureties of 300 

 each for four years. Members have to pay an 

 entrance-fee of 500 guineas and an annual subscrip- 

 tion of 30 guineas. The entrance-fee for members 

 who have acted as clerks is 150 guineas. 



Although the London Stock-exchange is not, as 

 generally is the case on the Continent, in any way 



controlled by the government, and has not a mon- 

 opoly, it practically secures the whole of the bond- 

 Jide business of buying or selling British govern- 

 ment securities. Its members voluntarily place 

 themselves under most stringent rules and regula- 

 tions, and the slightest irregularity is visited with 

 prompt pains and penalties. The committee is 

 entrusted with the power of investigating com- 

 plaints between members, or between the public 

 and members, and any departure from orthodox 

 procedure can be visited with penalty of suspen- 

 sion or expulsion. One of the regulations is that 

 no member is allowed to advertise for business. 

 Thirty members are annually balloted for to serve 

 as a committee, and there is no appeal from judicial 

 decisions that may be made by that body. 



Members act as brokers and jobbers. The broker 

 transacts business as between members of the Stock- 

 exchange and the public, obtaining his commission 

 from the clients who employ him. He deals in all 

 securities. The jobber or dealer confines his atten- 

 tion to some special group of securities, and gener- 

 ally offers to buy at one price or sell at a higher 

 any of the group stocks or shares he specially 

 may interest himself in. The margin between the 

 buying and selling price he may quote to any 

 broker varies according to the nature of the secur- 

 ity, the extent of competition, the state of the 

 market, &c. In some active stocks the margin 

 may be as little as J of 1 per cent. ; or if the stock 

 is one that is rarely dealt in the jobber may quote 

 a difference of 5 or even 10, and also say be is a 

 buyer or seller only at a price, and refuse to deal 

 unless what he is prepared to offer is acceptable to 

 the broker. 



On some of the continental bourses the condi- 

 tions of membership are much more stringent than 

 in England. On the Paris Bourse, for instance, 

 there are sixty-five officially recognised agents de 

 change, whose appointment rests with the govern- 

 ment. As a body these sixty-five are termed 

 the Parquet. Each member of the Parquet has 

 to deposit on appointment cash or securities to 

 the value of 10,000, and the Parquet as a body 

 guarantees transactions from the fund, to which 

 is added accumulating interest and a payment 

 to the fund by each member of 15 centimes on 

 each bargain. Intermediaries between the Par- 

 quet and the public are numerous. Reputable 

 firms also have a guarantee fund of their own. 

 These brokers, as they would be termed in Eng- 

 land, are known as the Coulisse. 



An enormous amount of business is transacted 

 between international exchanges by means of tele- 

 graphic communication. If, for instance, an event 

 occurs that causes sharp changes in prices, it may 

 happen that the price of some special security of an 

 international character is appreciably different on 

 one exchange from what it is on another. Italian 

 government funds may be quoted in Paris at a 

 much higher price than in London, after making 

 allowance for exchange rate, &c. Certain dealers 

 who closely watch the margins in price between 

 markets instantly send telegrams from different 

 markets in which Italian rente is dealt in, say 

 from Paris to buy in London, or from London to 

 sell in Paris. This arbitrage business is conducted 

 between the exchanges of all the world. There 

 is much intricacy in calculations as to what is 

 parity, as, for instance, in London or in Paris the 

 quotation of a security includes the interest or 

 dividend accrued since the last payment, while 

 on the German bourses securities are bought at 

 a price for the principal, and the amount of accrued 

 interest or dividend has to be paid beyond the prin- 

 cipal sum. There is only one notable exception on 

 the London Stock-exchange to the price being 

 inclusive of principal and accrued interest. This 



