Stock Exchange Information Prior to 1901 (6)

Method of Business

Stock exchanges as at present constituted are limited in membership and governed by strict rules which cover both methods of business, rates of commission to be charged, and conduct on the floor. The rules governing methods of business in New York prescribe a minimum commission of one-eighth of one per cent. on the face value of securities purchased for outside customers, one thirty-second of one per cent. for purchases made on account of fellow members, and one-fiftieth of one per cent. for purchases made on the order of another member on the floor.

In London commissions vary from 1s. per hundred to 2s. 6d. per hundred, according to the nature of the security. The Paris agents de change charge one-fourth of one per cent. In New York the Stock Exchange member may both transact business on the floor of the Stock Exchange and solicit business from outside customers. In London these functions are divided between the two functionaries known as "jobber" and "broker," which correspond roughly to the divisions in other English professions, as, for instance, the barrister and solicitor in law. Members of the London Stock Exchange are forbidden to advertise; New York Stock Exchange houses advertise freely. Agents de change in Paris are forbidden to solicit outside business.

Acceptance of a bid or offer of stock makes the transaction official on a stock exchange and binds each participant to the fulfillment of his bargain. Stocks thus sold must be delivered to the buyer by 2:15 P.M. of the ensuing day. The New York Stock Exchange practices daily settlement of such accounts. In London settlements are made fortnightly, the bargain being
carried for the account, that is to say, on credit, during the intervening period.

No security may be dealt in on the Stock Exchange which has not been formally "listed" by the committee. In New York a statement of the company's condition, with a balance-sheet, is required before listing; also proof that proper facilities for transfer and registry of shares have been provided, and that with bonds the mortgage has been properly drawn and recorded. Corporations unwilling to make public statements have, however, been allowed since 1885 to obtain a place in what was called the "unlisted department." Since stocks in this department enjoy all the facilities of "listed stocks," the discrimation has been entirely futile.

Membership Prices and Rules

With the limitation of stock exchange membership title to a seat in the exchange becomes valuable property. In New York the price of Stock Exchange seats has fluctuated with great irregularity. In 1879 their price was $9000; they rose to $20,000 in 1881, and to $37,000 in 1883, but by 1893 had declined to $15,250. From that price they gradually recovered, and in the recent great activity of business reached unprecedented figures. During the "boom" of May, 1901, they sold for $66,000, and subsequently, in 1902, went as high as $84,000.

The price at the opening of 1903 was $80,000. Ownership of a New York Stock Exchange seat does not necessarily imply the privilege of the floor; for that the owner must apply in due form to the committee on admissions. In the London Stock Exchange applicants for admission must be recommended by three members of at least four years' standing, who pledge themselves to the extent of L500 apiece to reimburse his creditors in case of his default within four years. If he is of foreign birth he must have been two years naturalized. In Paris, where the number of agents de change is limited to sixty, an applicant must be proposed by his predecessor or that predecessor's heirs, and must be approved by the governing committee
and the Minister of Finance.

To continue: Stock Exchange Information Prior to 1901 (7)

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