disdain in their hearts which cannot easily be eradicated. Nay, should they concede the most elementary principle of reform, they would infringe the Prophet's law, which is life to them. They would lie under the Prophet's curse declared against those who have fellowship with unbelievers, and would prepare for themselves a place in torment beside them. It may seem puerile to insist on the omnipotence of religion in daily life. With some Western nations it may be the cloak taken out for Sunday wear. But to the Turk, with few exceptions, it is the mainspring and mainstay of life.

THE

ness.

THE trade of a stockbroker is a modern one-hardly two hundred years old. It may be said to have begun in this country with the beginning of our funded debt, and with the incorporation of the Bank of England. Before that time the peculiar documents called stocks and shares did not exist in sufficient quantity, if at all, to make dealing in them a profitable busiBut with the creation of this new form of representative wealth came a new occupation, which was early taken advantage of by the Jews, who have ever since been conspicuous as dealers on the Stock Exchanges of the world. There were, no doubt, loans and securities earlier than two hundred years ago, but until then they had been private or semi-private affairs; and invitations to the public to trust a nation or a small knot of traders with their savings had not become of that organised and customary kind which is implied in the free creation of bonds and shares. But, once started, the trade became a brisk one, and the disturbances, revolutions, and wars of the last century had a most stimulating effect on the production of new material of this kind for traders at home and abroad. Within little more than a century our national debt grew from 25,000,000l. or 30,000,000l. to nearly 900,000,000l., all told; and for the limited ways of doing business then possible that was itself capable of giving a most extensive field for speculation. Then, too, from the first the dealers in stocks and shares were fertile workers in the field of corporate enterprise. Every now and then their energetic pursuit of new fields of joint-stock speculation led to the perpetration of some gigantic swindle or the committal of some perhaps more

It

disastrous folly, such as the famous and typical South Sea Bubble. was not, however, till almost the present generation that the Stock Exchange and the trade of stockbroking took its grand position in the country, and became nearly the most important business carried on in the City of London. With the application of steam to locomotion on land the world entered on a new era the stockjobber on a field of enterprise which must have exceeded the most fabulous of his dreams. As soon as the mania for developing the resources of nations by means of railways fairly took hold on the world, the rapidity with which money was borrowed for the purpose exceeded anything of the kind that had ever occurred before, and was productive of a series of commercial crises which, checking the onward rush for a time, did not hinder renewed outbursts as soon as the speculators had got their breath again. As recently as 1845 the total capital sunk in railways throughout the world was only about 114,000,000l., of which Great Britain had spent some 64,000,000l. and America 18,000,000l. At the present time the railways of Great Britain alone represent a nominal outlay of nearly 650,000,000l., and those of the United States 760,000,000l.

Besides these sums France has spent about 400,000,000l., Germany about 220,000,000l., and Russia about 250,000,000l. Many other foreign countries have thus pledged the national credit for nominally at least the same kind of works of public utility' to an enormous extent; and hence the national debts of Turkey, Austria and Hungary, Egypt, Italy, Spain, and of various petty semi-barbarous South American republics, of the Empires of Brazil and of Chili, have been

swollen prodigiously. What the total pledges of credit in the world may amount to, or what amount of savings may have been locked up in corporate enterprises, it would be almost impossible to say, just as it is impossible to reckon how far the aggregate figures represent money spent and how far mere paper; but the national debts of the world are now swollen almost as much as the credit of separate enterprise and corporations. principal countries of Europe owe about 3,500,000,000l., exclusive of the unsecured paper currencies and our home debt; and all other national debts which come within the cognisance of civilisation may be valued at about 1,000,000,000l.

The

These huge and rapidly accumulated obligations are not, it is true, due, by any means, exclusively to the spread of industrial enterprise -Austria, Spain, Italy, France, the United States, and Russia having contracted large national debts in the prosecution of wars and conquests; but for the purposes of the stockbroker it is much the same whether the securities' he deals in are based on industrial undertakings or commerce, or are mere loans necessitated by a national bankruptcy or an ambitious war. His business is to buy and sell and get gain out of these bits of paper; and it is of the essence of that business that quantity should have weight with him, not quality. And of quantity it cannot be denied that the modern stockbroker has enough. The nominal values of the stocks and shares quoted in the London Stock Exchange was computed by the compiler of Fenn on the Funds two years ago to be about 4,550,000,000l., and at the present time rather exceeds that amount. There is also probably well on towards 50,000,000l. more, not on its list, comprising the capital of small joint-stock enterprises, mines of all kinds, country banks, &c., which London and provincial stock

brokers traffic in and make profit by.

What proportion of these huge totals represent really sound values we cannot now enquire: all we have to do is to point to the fact that the means of doing business has been thus swollen by the modern spirit of enterprise. Each unit of this total represents a pledge given by some nation of its credit and means, or a venture of some trader or traders on the spirit of the time; and each has its risks, its chances, its varying and infinitely varied gradations of stability or plausibility. The Limited Liability Acts of 1862 and 1867 helped to extend to trade enterprises generally the passion for corporate ventures which was here previously confined to certain channels, in some of which, such as joint-stock banking, it was showing signs of having spent itself. These Acts, by limiting the risks of individuals, helped to bring into being floods of new schemes. The Act of 1862 did much to bring on us the panic of 1866, and unquestionably stimu lated to an exceedingly unhealthy degree the speculative tendencies of that time. Nor has the Act of 1867 done much to quench the evil. Companies have since 1862 and up to to-day started by the thousand, like mushrooms in the night, only to vanish as quickly as they came, leaving only a void in the pockets of the unsophisticated and gullible subscribers to the shares, till it may be almost said that the amount of capital which has run through the Stock Exchange in bubble companies as through a sieve has been as great as that which has found permanent rest in sound enterprises, whose stocks stand the test of the market. This state of things may have been an inevitable concomitant of legitimate progress,' but it has been a very painful one many, and has brought limited liability' into so great disrepute that what was sound and good in the

6

to

principle promises to be now underrated.

Here, then, only briefly outlined, we have some idea of the materials out of which the modern stockbroker creates his trade. He is a buyer and seller of bits of paper which bear either that this or that company has so much of So-andSo's money, or that this or that Government or railway company has guaranteed for so long or for ever, in virtue of certain moneys paid down, so much per cent. per annum to the holder of this its certificate of indebtedness. The varieties of bonds and shares are almost innumerable; but the classes into which they may all be divided are two-1st, The share or partnership certificate constituting the holder a partner entitled to a share in the profits, if any, of a joint-stock undertaking up to the extent of the capital which said share represents him to have paid; and 2nd, the bond,' which is in one form or other an acknowledgment for a loan, and a promise to pay fixed interest on that loan for a certain period or for ever, as the case may be, as well as in many cases to redeem it by a fixed date. Of the first class are all shares in banks, mines, industrial companies, and railways; and of the second national bonds of all kinds, railway bonds, debentures, and mortgage bonds generally. It would prove tedions to the reader to analyse the varieties of these securities in detail; but one or two of the distinctions amongst the numerous kinds of bonds may be given. Our own Consols are a perpetual form of bond, for instance. They do not specify dates of repayment, but only contain a promise to give so much per cent. to the holders. When cancelled they can only be so by the Government, through its brokers, buying them in at the market price of the day. Terminable Government or joint-stock companies' bonds. are, on the other hand, quite

another kind of document, though still an acknowledgment of indebtedness. They specify a date when they must be paid off, and generally make stipulations as to a sinking fund to be applied to annual or semi-annual drawings of bonds payable at par, no matter what the original or actual price of the bond may have been. These are in reality, therefore, usually annuity bonds, only that the annuity is split up into the interest at a fixed rate, and lottery payments at a cumulative rate; and this has been the favourite guise in which the chief speculative foreign loans have been dressed up for the investor's rather voracious appetite for 'a little gambling.' Then, again, there are the debentures of our English railways and the mortgage bonds of American and other railways-the one giving only a fixed interest with no mortgage powers over the line in event of the non-payment of that interest, and the other nominally enabling the mortgagees or bondholders to sell the property for their own benefit when default occurs. It is not found in practice that the latter form conveys, as a rule, any appreciable advantage, but rather the reverse; for when an American company of any size comes to grief, all that is produced by an attempt to enforce right of the kind is a wrangle among the various holders of bonds issued under, perhaps, two or three successive mortgage deeds, and under different States laws, and a very striking illustration of the cxtremely intangible character of the substance which the mortgages were taken to represent. It eludes the grasp as effectually as any Will-o'-the-Wisp. Another form of debt still is the Exchequer Bills of our own Government and the Treasury Bills of Foreign States; but these neither more nor less than promissory notes.

are

It will not be necessary to enter further into details on these points.

The reader will now have a general idea of the materials in which the stockbroker trades, and will therefore be able to follow the description which it is now proposed to give of the manner in which this trade is carried on in London. At the very threshold of this description it becomes visible that the Stock-market has to perform a double function. It deals in stocks and shares, buys and sells, and it is also the centre where the peculiar kinds of security there found can alone be successfully brought into being. Without the aid of the Stock Exchange it would never have been possible to bring the innumerable enterprises whose paper is dealt in in that market to maturity; for the stock must not only be made but readily sold to those who will give money for it. As a medium for finding capital with which to start any corporate enterprise, the Stock Exchange stands in the same position as the banks do to the trades in want of discount accommodation-through the Stock Exchange agency the money is found in all cases of any importance.

We have, therefore, to contemplate the stockbroker in these two aspects. He may be a promoter of a scheme, or he may be the mere agent of clients who want to buy or sell this stock or that already 'placed on the market.' In his first capacity he has often a very arduous and peculiar work to do in order to persuade the public that the new security which he has to offer is a good one. Some recent trials in the criminal courts have made the general public familiar to a certain extent with these arts, and have conveyed a by no means favourable impression about them; and we are sorry to say that these arts have been but too prevalent in cases where one might have thought them not required. The only defence of the system of making false purchases and sales on the market in order to induce the

public, who go by prices and not by facts as a rule, to come in and actually buy through belief that the price indicates a good thing, is that sometimes, but for a proceeding of this kind, a good enterprise would have been ruined. It is an insufficient defence, and cannot justify in any degree a practice which has led to incalculable evils. Before it is possible to understand this or any other part of the stockbroker's business, however, we must try to shape some sort of image of what the Stock Exchange is itself, of the leading rules under which it transacts business, of the divisions of that business, and of the nature of Stock Exchange speculation.

The modern Stock Exchange of London, to which it will be best to confine our observations, is in its most obvious aspect a large hall with a number of offices around it, built within the irregular quadrangle formed by Bartholomew Lane, Throgmorton Street, and Threadneedle Street and Old Broad Street. Primarily it is merely a convenient meeting-place where stockbrokers gather to transact their business, just as the Royal Exchange-now an almost deserted building is a meeting-place for those who deal in foreign bills of exchange. Various circumstances have combined, however, to give the Stock Exchange the character of an organised joint-stock undertaking of a quasi-public character, and to make it a sort of standard of worth as well as a market. In the first place the members of the 'House' (as it is familiarly called) carry on their business under an elaborate code of rules, the practical aim of which is to make the body as much as possible a law to itself. The modes of making bargains, the responsibility of dealers, and the treatment of members who become bankrupt, with many minor matters, are all subject to this special code, the practical effect of which is, therefore, to make the