STOCK in a company, like shares, is a share in the capital, but, unlike shares, it is subdivisible into fractional parts, and so held by its proprietors who are registered as the stockholders in the company. Stock is a chose in action, but a holder cannot sue for the capital value of his holding; his interest in the stock he holds is limited to a right to receive dividends thereon subject to redemption by the company. According to Lord Hatherley, in Morrice v. Ayhner, the principal difference between shares and stock is, that "shares in a company, as shares, cannot be bought in small fractions of any amount (fractions of less than a pound); but the consolidated stock of a com pany can be bought just in the same way as the stock of the public debt can be bought, split up into as many portions as you like, and subdivided into as small fractions as you please. And that, no doubt, is of great iivportance in selling. . . . Independently of that, however, it possesses all the qualities of shares. It is, in fact, simply a set of shares put together in a. bundle." In that case it was decided that the words " shares in a railway " company used in a will, are sufficient to pass " stock " in a railway company. Generally speaking, stock is personal property whatever may be the character of the actual property of the company, the most striking exception to this rule being shares in the New River, which are always real estate. See NATIONAL DEBT.
great centre for the sale and purchase of stocks and shares is, for the United Kingdom, the Stock Exchange in London.
This is the market to which the great .majority of the selling and buying public go. They cannot, however, deal there in person. All transactions by the public must be effected through the agency of persons who are members of the Stock Exchange, and who carry on business there as either jobbers or brokers. But the brokers are the particular class of members with whom the public deal. The JOBBERS are dealt with by the brokers. There are Stock Exchanges in a considerable number of the most important provincial towns, but the rules and customs of the London Exchange may be taken, except in certain matters of detail, as typical of them all. Certainly in every Stock Exchange will be found the member-broker. A person who acts as a stockbroker, and is not a member of the Exchange on which he affects to deal is known as an outside stockbroker. In London he is generally a merely speculative dealer in stocks and shares, and generally stands in the relation of a principal, and not an agent, to the person for whom he assumes to buy or sell. In the provinces this is not always generally so—especially
in respect of dealings in local securities—for a provincial outside broker has often a considerable private clientele ready to buy or sell. A broker who is a member of the London Stock Exchange is subject to the control of a committee, is not allowed to advertise or tout for business from the public, and is prohibited from dealing on the COVER system. And if any dispute arises between such a broker and his client it can generally be settled by reference to the Stock Exchange committee, provided the non-member party thereto is willing to submit to the decision arrived at.
The remuneration of a broker takes the form of a commission on the value of the securities bought or sold. There is not, however, any authorised scale, though in practice the following is usual :— On Nominal Value.
British and Indian Government Securities . 2s. 6d. per cent.
Colonial, Corporation, and Foreign Stocks . 5s. Od. „ Home Railway Stocks. . 5s . –10s . „ American and Foreign Railway Securities . 5s.-10s. „ Shares in mines, industrial companies, Sic.— Under £1 nominal value .. 3d. per share.
. . .
. . .
y, £2 PI 3) • . 6d. „ .
.
1, 15 )) )1 • . . . 9d. „ .
.
„ L10 If • . I s. ,, and 6d. per share for every £5 per share in excess.
Only one commission is charged if a bargain is closed during the account in which it is, made. Thus if a client both buys and sells, or sells and buys, the same security during the same account, the broker will only charge him a commission on either the purchase or the sale ; but the charge will generally be made in respect of that one of the transactions which is the highest in value. With respect to keeping open speculative accounts—that is, where the clients carry over from account to account—the practice of brokers varies. " Some charge a commission for the original buying or selling (according as it is a bull or a bear account), and also on the ultimate closing of the account, but do not charge for effecting the intermediate carrying over transactions. Others charge a commission on the original purchase or sale, and a small commission for each carrying over, and nothing on closing the account. The latter is the more usual; it is almost necessary for brokers to charge a com mission on carrying-overs, as otherwise clients would be apt to open large speculative accounts, and keep them open for an unlimited time, thus giving the broker infinite trouble, and exposing him to risk in the event of a defaulting client " (Stutfzeld's Stock Exchange).