Stock Exchange or Bourse

STOCK EXCHANGE or BOURSE, a market for the purchase and sale of securities, such as shares, stocks and bonds.

Markets for dealing in securities have existed for centuries. They had their beginnings usually in a few men meeting regularly in a certain place, a coffee house or restaurant, who for a commis sion were prepared to act as intermediaries between buyers and sellers. As their business grew, these men formed themselves into a sort of association, and rules were framed to regulate the conduct of their business. With the growth and wider distribu tion of wealth, the volume of stock exchange business has steadily expanded, and in the past quarter of a century the growth has been more rapid than in any similar period. Nowadays, prac tically everyone in highly-civilized countries has dealings with a stock exchange, or bourse as it is called on the Continent. The development of joint stock enterprise could never have reached its present stage but for the facilities which the stock exchanges provide for dealing in securities. Their primary function is to liquefy capital by enabling a person who has invested money in, say, a factory or a railway, to convert it into cash by dis posing of his share in the enterprise to someone else. Without the stock exchange, capital would become immobilized, for once invested there would be no means of liquefying it.

London.

London is the greatest of the world's stock ex changes in the range and volume of its transactions. Although New York has made great progress in recent years, London is by far the most international stock exchange in the world, the range of its business covering every corner of the earth and every class and type of security. It was not until the latter part of the i8th century that the London stockbrokers definitely formed themselves into a stock exchange with premises of their own. They had been in the habit of meeting and doing business in the Royal Exchange and neighbouring places, but in 1773 those who had hitherto met at "Jonathan's" (Coffee House), in Change Alley, moved to a room in Sweeting's Alley to which the name of "The Stock Exchange" was formally given, the building becom ing known as "The Stock Exchange Coffee House" or "Tavern." Business grew apace and in 18o1 a group of members raised i20,000 of capital in 400 shares of iso each for the purpose of providing an adequate building and acquired a site in Capel Court, Bartholomew lane, which to-day is one of the entrances to the "house." The new building of the members was opened in 18o2. At that time the members of the stock exchange numbered about Soo. Rules were drawn up for the conduct of business and for regu lating membership of the "house." It was provided that all future members should be admitted by ballot, and members were re quired to pay a subscription of io guineas each for themselves and 5 guineas for their clerks. It was always the general intention

that the shares should be held by members but there was always a large number (and until quite recently a majority) of members who did not hold shares. The first extension was made in 1823 when the floor space was nearly doubled by the addition of a second room for dealings in foreign stock. In 1854 the two rooms with some small additions were rebuilt as one in the form of a dome with two transepts. Several subsequent extensions of this building have been made, the principal one being in 1885 when another dome was added. The stock exchange building occupies the greater portion of the triangular area formed by Throgmorton street, Bartholomew lane and Old Broad street. Outwardly it is an uninspiring structure, but the interior is both spacious and handsome.

The premises and property of the London stock exchange are owned by an association called "The Stock Exchange," the capi tal of which is in 20,000 shares of unlimited liability. On each of these shares 136 has been paid up. No one person may hold more than 200 shares, and only members can be registered as shareholders, except in the case of those who acquired their shares from proprietors who held them before Dec. 31, 1875. The new deed of settlement took effect on Jan. 1, 1876, when the number of proprietors was 268. In 1928 the number was 2,712. When a shareholder dies his shares must be sold to a member within two years. There is a ready market for the shares, for the dividends are handsome. Recently they have amounted to io per share. The income of the Stock Exchange (for 1927-28 it amounted to £231,583) is derived from the annual subscrip tions of members and their clerks and from entrance fees paid by new members and from rents and investments. The fees have been raised from time to time ; members admitted before March 25, 1876, and members admitted with two sureties before March 25, 1879, pay an annual subscription of only £21. The present annual subscription for new members with three sure ties, is Ioo guineas, and for new members with two sureties— that is to say, a clerk who has served four years in the house 50 guineas. The present entrance fees are 600 guineas for a mem ber with three sureties and 30o guineas for one with two sureties. The present entrance fees for authorized clerks—clerks author ized to deal—are 5o guineas and for unauthorized clerks 15 guineas; and their annual subscriptions amount to i oo guineas and 3o guineas respectively. For clerks admitted to the settling room only, no entrance fee is payable, but an annual subscription of io guineas is payable for each clerk. These subscriptions and fees are fixed annually by the trustees and managers.