Art. 5.-THE LONDON STOCK EXCHANGE. 1. Stocks and Shares. By Hartley Withers. Smith, Elder, 1910. London: 2. Stock Exchange Law and Practice. By W. A. Bewes. London: Sweet and Maxwell, 1910. 3. Rise of the London Money Market, 1640-1826. W. R. Bisschop. London: King, 1910. By 4. The Mechanism of the City. By Ellis T. Powell. London: King, 1910. 5. The Stock Exchange. By F. W. Hirst. Williams and Norgate, 1911. London: WHETHER the profession or business of stockbroking belongs to the class of those which deserve to be labelled parasitic is a question frequently debated with considerable and natural heat. It may be taken for granted that society will have to be reconstituted on a basis very different from that which exists at the present time if the Stock Exchange is to become lost in the limbo of obscurity. Membership continues to be an ambition and an aim for many a father who is on the look-out for an answer to the increasing pressure of the question: 'What shall we do with our sons?' It would be an interesting theme to elaborate the various pros and cons that might be brought forward with reference to the Stock Exchange career; but, in a review of the London Stock Exchange itself, to go at all deeply into the matter would take us too far. At the same time, it may be stated, without fear of contradiction and as eminently appropriate to the consideration of the object, that, provided a man is possessed of average intelligence, a certain amount of capital, and the willingness to endure long periods of comparative idleness (which are so much harder to survive than times of activity), he may feel confident that the House (as it is generally called) offers, at all events, a fair field for the provision of an income, and even occasionally, to the specially favoured, the chance of making a fortune. The Constitution of the Stock Exchange as it stands at present was settled so far back as 1802; but in 1876 a new deed of settlement was executed, while further modifications were introduced a few years ago. However, most of the salient points noticeable in the earlier deed are preserved in the existing constitution; and these afford some justification for the frequent taunt that the Stock Exchange is old-fashioned, that it declines to move with the times, and that in many respects its government is erratic, its rules anomalous, and its practices inconsistent. Charges of this kind could no doubt be easily formulated with some degree of accuracy against any body or institution which has stood the test of time like the Stock Exchange; but the very slowness with which changes are made, both in its constitution and its rules, bears witness to the gravity with which they have to be considered in the light of the future as well as that of the present. There are nine managers who represent the shareholders of the Stock Exchange; there are thirty Committee-men, elected annually, who look after the wellbeing of the members; and with a dual control of this kind, it is fairly obvious that causes of friction will not infrequently arise. It has been the aim of Stock Exchange reformers for many years past to tune into harmony the jarring discord which must inevitably sound so long as two separate bodies are in control; and, by a scheme devised in comparatively recent years for making every member a shareholder in course of time, these difficulties are being gradually removed. Within the course of the next half-century it is pretty certain that the Stock Exchange, as a company, will belong to the members, of whom each will have a stake in the enterprise; and that happy consummation, when it arrives, will put an end to a good many minor problems which still harass the House in its working, and possibly check those bolder plans for reform which are advocated by many of the members themselves. ་ Stock Exchange membership can be obtained in various ways. The easiest but most expensive method is to pay an entrance fee of 500 guineas, and to find three members who will be responsible for four years for the sum of 5001. each, this 15007, being forfeitable to the estate in the event of the new member being hammered' during the period. In addition, the candidate must buy three Stock Exchange shares, the price of which at present is about 1901. for the 137.-paid share; and he must also purchase from some retiring member a nomination, which can be bought for about 701., although, when nominations were first created, one is known to have changed hands for 700l. Incidentally, it may be related, as a strange irony of fate, that one of the buyers who paid this amount for his nomination was prevented by circumstances from carrying out his intention of membership, and he had to accept an offer of about 400l. for that nomination shortly after his purchase. The annual subscription is now forty guineas for all members who are elected, but older members who came in under a lighter scale pay thirty guineas, and there are some whose annual subscription is only twenty guineas. Even the latter is considerably more than the original subscription, which was ten guineas. The aspirant who wishes to become a member of the House under easier conditions has his entrance fee reduced to 250 guineas if he serves for four years in the Stock Exchange as a clerk; and for such persons less onerous conditions are imposed in respect of obtaining sureties and the purchase of shares. They need have only two sureties instead of three, and need buy but one share. The Committee every year elect a few candidates without nomination. The subscription, however, is the same for all, viz., forty guineas per annum, except in those cases just mentioned. Every candidate has to appear before the Committee prior to his election; and his sureties also must present themselves to answer questions, varying slightly from time to time, which are put to every candidate and his backers. One of these questions is: Would you take this man's cheque for 30007. in the ordinary way of business?' It is related that on one occasion a surety, who was not primed for this enquiry, replied in answer to it: 'Well, I should not pick it out'; and the incident has become classical. It will be seen, therefore, that the outsider who wants to come straight into the Stock Exchange as a member must be prepared to pay about 1200l., of which 5701. (the purchase price of the shares) is reproductive, substantial dividends being paid half-yearly. It is frequently contended that this expenditure is wholly inadequate, having regard to the highly responsible business which members of the Stock Exchange must undertake for the public: and certainly it seems very low as compared with the deposit required by Lloyds, the high price demanded for a seat in the New York Stock Exchange, or the enormous amount which has to be put down before a man can become a member of the inner clique of the Paris Bourse. In the last case, a capital of anything between 75,000l. and 95,000l. is necessary; and this, of course, makes it very difficult for anyone to become a member unless he is possessed of a fortune himself, or, as is commonly the case, is one of a group of wealthy men who elect him as their representative to deal in this way. Failures in the London Stock Exchange are sometimes declared to be far too frequent; and in a bad year this is no doubt the case. Amongst the legislation to come must be included some provision for increasing the stability of the individual Stock Exchange member; and that steps have already been taken in this direction is proved by the compulsion put upon new members for the purchase of shares-which shares, by the way, can only stand in the names of members of the House, save in exceptional circumstances. Members of the Stock Exchange are divided into two distinct classes-jobbers and brokers-between whom there are sharp distinctions in the matter of the business which they undertake. The broker, as everybody knows, deals with members of the public, acting as agent between them and the jobbers with whom he trades in the Stock Exchange. The jobbers are not allowed to deal with the public at all, but must confine their activities to transactions with the brokers and their fellow jobbers. Until lately the demarcations were but vaguely defined; and even now, although much stricter rules have been passed, there is a steady undercurrent of resentment between the two classes owing to acts which each regards as encroachments by the other upon its domain. As to which of the two divisions it is better to belong to, there are differences of opinion; but many men with experience of both classes hold that to gain a few years' experience with a broker and then to go into business as a jobber is the best course for a young man who contemplates a Stock Exchange career. Life on the Stock Exchange is not at all unpleasant, although the aspirant will have to banish from his mind the fancy descriptions which he has read-of hours ranging from 11 a.m. to 4 p.m., with an hour off for lunch and half-an-hour for tea. There are men, certainly, who go to lunch at twelve o'clock, and regularly every day spend at least three hours in playing dominoes in one of the Stock Exchange restaurants; while some members have been known to spend as much as six hours at a sitting over the ivories. But such habits may spell ruin. Some fifty years ago, one of the best-known men in the House, with a splendid connexion, fell into the habit of playing chess after lunch. The craze grew upon him to such an extent that his business gradually dropped off; and at last he had to retire from the House, 'hammered' and bankrupt. The profession, however, does involves long hours of idleness; and, in the circumstances, it is somewhat remarkable that there should be so little excess in the matter of alcoholism. The average broker, arriving at his office between 10 and 10.15 a.m., runs through his correspondence and takes note of the various orders contained in his letters. The jobber, not dealing with the public, has very little correspondence to trouble him, and often goes straight to the House, without visiting his office at all. He must be in the market ready to deal with the brokers as they come in armed with their orders, for the early bird catches the worm in the Stock Exchange as well as in other fields. By half-past ten the Stock Exchange is filling. There are some 5000 members of the House and 3000 clerks having the entrée to the Stock Exchange. The clerks who are authorised to transact business wear no distinguishing mark, but unauthorised clerks carry a blue button as a badge; while others who are admitted only to the settling rooms underneath the House wear red buttons. The button, it may be remarked, must be worn in the lapel of the coat, according to the official rule. When it was first enacted that clerks should wear buttons, there was a terrible outcry; and those who had to submit to the odious tyranny, as it was called, revenged themselves by wearing their buttons in all sorts of inconspicuous places. The stream of unauthorised and settling-room clerks goes downstairs into the basement in order to check the bargains which have been done on the previous day, while the members proceed to the floor of the House in order to deal and to discuss the outlook. Most members have a particular stand in the Stock Exchange, at which they are called by the waiters |