The Stock Exchange
The Stock Exchange
BOOKS ON BUSINESS
Crown 8vo. 2s. 6d. net.
A series dealing with all the most important aspectsof commercial activity.
"Short, pithy, simple, and well informed, and written by men ofacknowledged authority, these books are equally interesting, whetherthe reader knows something or nothing of the subject."
PORTS AND DOCKS. By Douglas Owen, Barrister-at-Law, Secretaryto the Alliance Marine and General Assurance Company.
RAILWAYS. By E. R. McDermott, Joint Editor of the RailwayNews, City Editor of the Daily News.
THE STOCK EXCHANGE. By Chas. Duguid, City Editor ofthe Daily Mail, Author of the "Story of the Stock Exchange,"etc. etc.
MONOPOLIES, TRUSTS, AND KARTELLS. By F. W.Hirst.
TRADE UNIONS. By G. Drage.
THE BUSINESS OF INSURANCE. By A. J. Wilson, Editorof the Investors' Review, City Editor of the Daily Chronicle.
THE ELECTRICAL INDUSTRY. By A. G. Whyte, B.SC.,Editor of Electrical Investments.
LAW IN BUSINESS. By H. A. Wilson.
THE MONEY MARKET. By F. Straker, Fellow of and Lecturerto the Institute of Bankers and Lecturer to the Educational Departmentof the London Chamber of Commerce.
THE SHIPBUILDING INDUSTRY. By David Pollock,M.I.N.A., Author of "Modern Shipbuilding and the Men Engaged inIt," etc. etc.
THE BUSINESS SIDE OF AGRICULTURE. By A. G. L.Rogers, M.A., Editor of the last Volume of the "History of Agricultureand Prices in England."
THE BUSINESS OF ADVERTISING. By C. G. Moran.
THE COTTON INDUSTRY AND TRADE. By S. J. Chapman.
CIVIL ENGINEERING. By T. C. Fidler.
THE IRON TRADE OF GREAT BRITAIN. By J. S. Jeans.
THE BREWING INDUSTRY. By Julian L. Baker, F.I.C., F.C.S.
THE AUTOMOBILE INDUSTRY. By Geoffrey de Holden-Stone.
MINING AND MINING INVESTMENTS. By A. Moil.
First Published.... February 1904
Second Edition..... November 1906
Third Edition .... November 1913
In accordance with the scope of the series ofBooks on Business, of which this little workforms an item, its main object is to explain tothe unversed in simple terms the somewhat complicatedmachinery of the Stock Exchange. Somecriticism is ventured upon here and there, and apractical hint may be gleaned now and again fromits pages; but the real aim of the book is merelyto explain, not to comment. If the book conveyssome idea of the important part the Stock Exchangeplays in the economy of the nation, and ofhow it plays that part; if it furnishes a solutionof the various mysteries which the routine of theStock Exchange presents to many minds, theobjects of the little work will have been attained.
Owing to the continued demand for the book,and to the changes which have occurred duringthe decade which has elapsed since it was written,it is now reprinted in revised form.
New Barnet, Herts,
|I. What the Stock Exchange is||1|
|II. The Market-place||6|
|III. The Members and their Clerks||18|
|IV. The Committee||26|
|V. Brokers and Jobbers||32|
|VI. How Business is Transacted||45|
|VII. The Settlement||56|
|VIII. The Zoology of the House||65|
|IX. Option Dealing||72|
|X. The Wares of the Market||84|
|XII. Price Lists and Records||109|
|XIII. The Royal Commission's View||125|
|XIV. A Sketch History||138|
|XV. A Broker's Day||150|
|XVI. From a Social Point of View||161|
The Stock Exchange has been described asthe mart of the world; as the nerve-centreof the politics and finances of nations; as thebarometer of their prosperity and adversity; andso on. It has also been described as the bottomlesspit of London, and as worse than all the hells.Perhaps, however, the Stock Exchange can bestbe defined and described as a market. Just asSmithfield is the market for meat and CoventGarden the market for flowers, fruit, and vegetables,so is the Stock Exchange the market forstocks and shares.
These stocks and shares, as everyone knows,are, roughly speaking, sleeping partnerships. Theholder of railway stock is a part-proprietor of therailway, and is entitled to his proportion of itsprofits; the holder of shares in a mining companyis similarly part-proprietor of the mine. Evenalthough the holders of the stocks of a nation,such as Consols, or of the debenture stocks ofa company, are creditors and not proprietors, theydepend, for the income which those stocks yieldthem, upon revenue and profits, just as does apartner in a business.
It will at once be seen that although the StockExchange may be defined as a mere market, thewares that are displayed and dealt in are of suchimportance as to entitle it to the more ambitiousdefinitions with which it has been exalted. It isworthy of being defined as the mart of the world,because these wares represent property in everypart of the world, and because the orders whichare executed in this mere market emanate fromall over the world. The business of the StockExchange is more varied and cosmopolitan thanthat of any other mart, except, perhaps, theMoney Market. The business of the StockExchange may be described as the business ofbusinesses. The institution may be defined as thenerve-centre of the politics and finances of nations,because in this mere market all that makes historyis focussed and finds instantaneous expression.It is worthy of being defined as the barometer oftheir prosperity and adversity, for a glance at thetone of this mere market, whose wares are moremercurial than these of any other mart, sufficesto indicate their condition. It may almost besaid that the price of Consols is the welfare ofthe world expressed in one figure.
Perhaps the Stock Exchange is unworthyenough to be defined as the bottomless pit, andto be described as worse than all the hells, if welook at the mere market from the point of viewof those who abuse the facilities which it offers forfree dealing—but only from that point of view.Without the Stock Exchange our commercial andindustrial life could never have attained its modernrefinements. Indirectly this institution providesthe sinews of industry and commerce, or, at allevents, that one great sinew, capital. The inventorwith an idea to develop, the trader witha business to expand, the pioneer with a countryto explore, the Government with a scheme tofinance, all betake themselves eventually to theStock Exchange.
It is the organisation of capital for speculationand investment, even as the banks are the organisationof capital for loans. Its members are inclose touch with all the capitalist investors andspeculators in the country, and can lay any schemefor which the financial sinews are required beforethem. Moreover, in providing a free market forthe securities upon which the money is subscribed,the Stock Exchange tempts subscriptions, andindeed renders them possible where otherwisethey might not be. Most people would hesitateto part with their money in exchange for eventhe best securities, did they not feel assured that,if necessity arose, they could readily obtain itsreturn by selling the security in the free marketwhich the Stock Exchange affords. But for theStock Exchange, even the Government would finda difficulty in borrowing; whilst great schemes,national, commercial, and industrial, would languishin the lack of a ready flow of capital. Railwayscould not traverse the land nor ships thesea; enterprise would be discouraged, and theoriginal and progressive ideas of clever men woulddecay undeveloped. Thus the Stock Exchangeis linked closely with the prosperity of the worldin general and of the nation in particular, and ithas grown with the development of that prosperity.
Some very fair idea of how it has grown isobviously conveyed by a statement of the nominalvalue of the wares in which it deals. It is impossibleto form an estimate of the whole of theenormous amount, as there are dealings in somany securities which are not recognised in theOfficial List of the market. But the nominal valueof the securities thus quoted at the end of 1912reached the enormous total of £10,990,249,126;this comparing with £8,787,316,406 in 1902, anincrease of £2,202,932,720, or no less than 25 percent. In other words, the amount of securitiesofficially quoted in the Stock Exchange is one-quarterlarger than it was a decade ago.
The market-place, where the dealing in thismass of securities is carried on, is by no meansof imposing appearance from the exterior point ofview. Of all the Stock Exchanges, Bourses, andBolsas throughout the country and the world, theLondon Stock Exchange makes, perhaps, the leastexterior show. The tourist often seeks it in vain,and thousands of Londoners pass it every daywithout knowing that behind the suites of offices,with their Portland-stone walls relieved by granite,is hidden the mighty market-place. Yet, for itspurposes, the Stock Exchange, or the House, asthe members and even the Rules affectionatelyterm it, could not be better situated. It is in thevery heart of the City. Its west door, the CapelCourt entrance, which is the most important bytradition though not by usage, faces the easternend of the Bank of England, and the buildingoccupies the greater part of the triangle whichhas Bartholomew Lane for its base, ThrogmortonStreet for its north side, and Threadneedle Streetand Old Broad Street for its south side, the apexof the triangle being formed by the junction ofThrogmorton Street and Old Broad Street.
As to the interior, it is without form, thoughanything but void in business hours. There is notrace of the triangle to the insider, the boundarylines being broken where the surrounding officesabut, or where they have been swept away asopportunity offered for the extension of the StockExchange proper. Although the site, includingthe surrounding offices, occupies some 40,000square feet, the Stock Exchange itself is onlyabout half that in floor area. The whole designof the interior architecture, Italian in style, ismarked by a good deal