Stock Exchange an imperium in imperio to a greater extent than any other mere market organisation in the country, except, perhaps, Tattersall's. Members are forbidden to go to law with each other to enforce claims; all is to be settled by the governing body of the House' itself -the Committee of the Stock Exchange. This body possesses ample powers for calling members who break the rules to account, and by a two-thirds majority vote in a meeting of not less than twelve the Committeemen can expel any offender. Members who fail in business, become by that failure unqualified to continue in membership; but they may be readmitted two years after they have got their creditors' discharge if they have paid 68. 8d. in the pound, or sooner if they pay in full. The bankruptcy business of the House is managed by Official Assignees,' who examine into the bankrupt's affairs, and divide his assets.

This represents one side of the organisation, a side which has its uses and its defects. But before dwelling on this we must touch on another aspect of the Stock Exchange, which is not so habitually visible to those who look at it from the outside. Besides being an organisation for carrying on a special kind of business in a style suited to the ideas of its members, the Stock Exchange is a joint-stock company itself. The building belongs to the company and the members; both contribute to the profits of the company as subscribers to the institution, and partake of these profits as shareholders. Formerly, we believe, the shares were few, and for large amounts; but some years ago they were split up into roths, so that, if possible, every subscriber to the 'House' might become also a shareholder, and interest himself in its affairs with a view to profit. The working of such an arrangement as this is visible in the extremely loose manner in which new members are

admitted. In some of our provincial stock exchanges the rules of admission are very strict; and before a man can become a member he must not only find large securities for his well-doing, but must prove himself a man of substance by depositing a considerable sum of money in trust for the protection of fellow members with whom he deals. There

can be no question that such a course tends to curb to some extent reckless speculation, and to keep stockdealing respectable; but this is not the manner of the London Stock Exchange. There, till quite lately, any man might be admitted who paid the 251. or 50l. entry money, and 12l. 128. per annum subscription, if he found three members to be security for him for a small amount-some 500l. each. Within the last three months the subscription was raised to 20l. per annum, and the entrance fee for principals to 100l., and for their clerks to 6ol., while the three sureties have now to stand good for 750l. apiece; but otherwise the position is as before, with the result that the Stock Exchange has become the haunt of adventurers from all parts of the world, and is surrounded by a more repellent set of vagabonds, as the satellites of these, than can be found anywhere else in London. Betting-men, who have failed on the turf, take to stockbroking and jobbing, and either enter the 'House,' or gamble round the doors; and loafers, who have done no good at any legitimate trade, find their refuge here. Nondescripts from the Low Countries, Jews and Greeks from all parts of Europe and the Levant, gather to swell the total of those who are either members of the 'House,' or who 'job' outside with kindred spirits within.

The Stock Exchange, in short, while almost in spite of itself performing great public functions, is conducted very much in the spirit of a private joint-stock company,

with a particularly strong eye to profits; and on this principle it has thriven, until the dividends paid to the lucky shareholders are somewhere about 105 per cent. on the original value of the shares. This commercial policy has beyond question had something to do with the extreme disrepute into which stockbroking and the Stock Exchange have lately been brought, and therefore it would be well if the members could see their way to reform in time. It is already becoming an open question whether it would not be better to abolish the Stock Exchange altogether, and to make stockbroking no longer the privileged trade which it now is. If that reform takes place, the spirit which at present guides Stock-Exchange policy will be its cause. The members of the 'House' are, in point of fact, trying to do two things of an opposite kind-to be guides of the public in the matter of investment, and at the same time to secure the profits of a prosperous gambling hell.

We

We must now, however, look more closely at the stockbroking trade itself, and the manner in which it is carried on, both in order to compre hend its nature, and to be able to grasp the defects of the present organisation in carrying it on. shall also thus get at the whole modus operandi of Stock Exchange speculation, of company floating and loan manufacturing, and understand more clearly the position which the stockbroker holds in relation to these various branches of his trade. The primary occupation of a stock broker is, as we have seen, to buy and sell those securities which in a great variety of ways represent capital invested or spent; and in the pursuit of that business in its simplest form his work and duty would be to go and find a purchaser when he had stock of any sort to sell, or to seek a seller when he had stock to buy. Now, but for the Stock Exchange and its machinery, brokers

would have to hunt for customers, and bargains would be less rapid, and more difficult to effect. The Stock Exchange simplifies the broker's labours to such an extent, however, that it is very much to be questioned whether he is of any real use at all. The pivot on which the business of the Stock Exchange, as now systematised, hinges is not the broker, but the dealer or jobber, whose functions are quite distinct from that of the broker, and must not be confounded with them. The stockjobber is a sort of wholesale merchant who buys and sells on his own account alone, and not, like the broker, at the bidding of another. In most cases a jobber attaches himself to one particular class of stock, and buys and sells in that with all comers. Thus there are jobbers. who deal mostly in the debenture or preference stocks of one or other of the English railways; others who devote themselves to ordinary shares; others still whose staple or sole business is in foreign bonds; and by this arrangement, which has come about as it were by force of natural selection, the Stock Exchange is split up into a number of socalled 'markets.' The jobbers congregate in groups which are determined by the stocks in which they have elected to deal.

One very obvious advantage arising from this is the facility with which a broker can do his business. Instead of hunting about for a buyer or seller of stocks, which a client either has or wants to have, he goes into the 'House' and direct to one of the jobbers who deals in the particular stock, and with him may at once strike a bargain. In order to make this mode of doing business still more easy, a rule prevails, the object of which is to prevent cheating on the part of the jobber, and to put all brokers on a level. When a broker goes jobber whether to buy or to sell,. the jobber is compelled to what is. called 'make a price,' i.e. he must

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tell both what he will sell and what he will buy a given quantity of a given stock at. Hence the invariable double quotations given in the newspapers. Turks,' we are there told, closed 13 to 3,' or 'Argentine 68 to 70;' by which the initiated understand that the lower figure is the one at which the jobbers in these stocks have agreed to buy, and the higher the price at which they have resolved to sell. Everyone who enters the market is therefore sure of fair play, because if a dealer names a false price the rules of the market force him to deal at that price should the broker so choose. This naming the double price has also the advantage of indicating to some extent the condition of the market in any particular stock. For example, in the above instances, the quotations for 'Turks' would be called a close quotationthe dealer only taking a 'turn' of per cent. as his profit; but in the case of the Argentine stock there is a difference of 2 per cent., indicating that the market is unsettled by speculation, and that the jobber feels that he must protect himself by a wider margin between what he buys at and what he sells at.

It will be at once seen that this power of the jobber to make prices and to deal freely is a very great one, and were it not tempered by competition it would be often mischievous. There is no doubt either that in the case of small adventures, loans, or jointstock companies, in which, perhaps, only one jobber or two are really interested, along with a broker or two who manage the placing of the paper values, the power has been abused often to the injury of the public. These jobbers have been given the stock to place by the promoters or concocters of the swindle, and make what prices they like in collusion with brokers who buy and sell fictitiously in order to give a semblance of demand, and to get a

false quotation marked on the official list. That list then and so far becomes a means of cheating the public instead of a means of telling them the truth. With great stocks, such as those of our leading home railways, or the funded debts of the two or three States in the world that have solid credit, this kind of roguery cannot of course be practised. With these, therefore, the prices depend purely upon the competition in the market. there are many buyers, the jobbers can raise the price; if many sellers, they put it down just as the dealers in any other commodity have to do; but they are entirely at the mercy of the market in so doing. But where new securities are concerned the power of the jobber and his satellite the broker is almost without limit at times.

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We must turn, then, to the most important function which this duality of position amongst the members of the Stock Exchange enables that institution to play-the function of aiding speculation. As at present constituted the London Stock Exchange is probably the most perfect organisation for the transaction of speculative bargains which exists, and it is so because of the peculiar relations in which jobber and broker stand to each other. one sense, every purchase or sale that a jobber effects with a broker may be considered as a pure speculation in itself. The jobber may possibly have the stock to sell; but possession is in no sense requisite, and he may buy after he has sold. A jobber's work is to buy and sell to all comers (amongst members of the 'House' of course) at the best prices he can get, and he may deal in hundreds of thousands of a security without ever handling any of it. Except so far as reputation may guide him, he has no knowledge even whether the purchases or sales effected with him by brokers are based on stock or merely

fictitions. He buys and sells, his sole care being to secure to himself the turn of the market'-the difference between the price he bought at and the price at which he sells and to guard himself from loss in a falling market. For example, a broker has an order from some client to go and sell 20,000l. of a given stock on speculation for the fall, and immediately goes to the dealer he knows best, or who has the largest business in that particular security, and asks him to make a price. If the price made be satisfactory the sale is effected, and this 20,000l. stock gets booked by the jobber as so much stock which he has bought, and which, in order to make his book 'even,' as it is called, he must try and sell again to some one else. Should he succeed in doing so at his own price to some other broker, or to a dozen brokers with orders to buy, he will have made a profit of, or, or, or I per cent., as the case may be; but if the stock sinks rapidly, and he can find few purchasers at the price, he may have to submit to a loss on a part or the whole of the 20,000l. before he has balanced his book. On the other hand, of course, if the price rises he makes a larger profit. In either case where it is a big security that is dealt in, he has to submit to tendencies more or less beyond his control. And therefore, in times of financial panic, his position becomes a dangerous one, as indeed also in times of financial inflation; it is particularly dangerous also because the whole of the transactions involved in his buying and selling this 20,000l. stock or a hundred like sums may be based on a mere speculative opinion. The client of the broker who sold the stock originally may not have possessed a scrap of it, but sold merely because he was told, or had the opinion, that the stock was going to fall; and equally the ulti

mate buyer or buyers may have no wish to possess the stock, but merely buy because their speculative opinion is that the stock in question is going to rise.

It is within the mark to say that in recent years full five-sixths of the Stock Exchange business has been of this speculative character; and the jobber is the one who makes it so easy, because he is always-except when panic bursts out ready to buy or sell, asking no questions. He and the brokers look to make their profits out of both classes of specu lators-the 'bulls,' or speculators for the rise, and the 'bears,' or spelators for the fall, the one by commissions, the other by 'turns' of the market and fluctuations up or down, contrive in the long run to let the speculators be the losers.

Still the game is a dangerous one, and, since the late bankruptcies of big foreign borrowers became the fashion, the jobbers and brokers amongst them must have lost prodigious sums of money. For, although the machinery of the Stock Exchange is all in favour of the members and against the outsiders, these members are very shortsighted persons as a rule. They seldom look much ahead, but are guided by the tendency of the day or even hour; and hence, when a current sets in in any particular direction with a particular class of stocks, they are seldom as a body able to see it till it is too late. other words, for them the market value of a given stock is never gauged by its intrinsic worth so much as by the speculative furore of the moment. It is this that explains the marvellous effect of lies in the course of any one day's dealing. Almost every day readers of newspapers will find if they turn to the money columns that such and such stocks were raised or depressed by 'rumours' of this and that; and to an unsophisticated mind it cannot

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but be a marvel how stories, usually false or only half true, should produce an effect on stocks often measured by gains or losses of millions. But it is easily explained when the character of the bulk of the business is taken into account. It is business founded on opinion and often on the chance of the moment. A thousand temporary influences are at work appealing to the passions of the hour with tenfold the force of the permanent conditions or surroundings of the stock. The dealers may find a large preponderance of selling brokers coming to them, and want to raise the price of stock in order to tempt buyers, and straightway favourable rumours get bruited, or, when the reverse conditions obtain, unfavourable.

Now, were either the jobber or the broker done away with, this peculiarly unhealthy gambling' condition of business could hardly obtain to the extent it does. The ordinary broker, for the sake of 'commissions,' tempts people, almost in spite of themselves, to speculate, and jobber renders such speculation easy by the facility which he gives for the transaction by buying and selling for the ‘turn.'

It is urged, of course, that all these facilities are necessary to the transaction of business, and that the play of 'bull' and 'bear' tends to keep prices more equal in the long run than they would otherwise be. But is there any advantage in the system to constitute a sufficient compensation for the gambling fever which has in recent years more and more pervaded all classes of society, and without the aid of which the whole class of bubble companies, foreign loans, and frauds generally, that we are now suffering from the collapse of, could never have been perpetrated? The revelation which last year's parliamentary committee and late criminal trials have made of the

modus operandi by which these frauds were 'placed,' makes the aid which this huge machinery for speculation gives them painfully evident. Take a foreign loan hoax for example, and observe how easily bonds, of which not one-fiftieth portion has been subscribed for by the public, can get quoted at a high premium. Buying goes on by the persons who are interested in seeing the swindle succeed and by their nominees. A little judicious outlay of capital in enabling these dummies to subscribe for bonds and to buy in the market, the skilful combination of brokers' and dealers' resources, in order to keep quotations up at a premium, are all so much baiting of the trap for the outside public. To the mass of these anything quoted at a premium offers an almost irresistible temptation; and, either with a view to investing in a good thing, or to make a snap profit by buying at the apparently rising prices to sell again at a higher level still, people are gradually sucked into the vortex. The public is pretty sure to come in the faster the higher the premium is run up, and, once well in, the price is allowed to drop gradually away. The dummies and the loan agents 'get out' of as many of their bonds as they can, and the public are left to mourn their losses, for they nearly always object to sell out till it is too late, in the vain hope of another rise.

The facility which the intervention of the jobber gives for carrying on all the fictitious dealing which this involves is unquestionably at the root of half the mischief, his object being to buy and sell to all, regardless of the victims or of the worth of any security-the more bargains meaning for him of course usually the more profit. He takes care that in the case of a swindle which is being foisted on the public his gains shall be secure and his bargains