BROKER, a person employed in the negotiation and arrangement of mercan tile transactions between other parties, and generally engaged in the interest of one of the principals, either the buyer or the seller, but sometimes acting as the agent of both. As it usually happens that brokers apply themselves to nego tiations for the purchase and sale of some particular article or class of articles, they by that means acquire an intimate know ledge of the qualities and market value of the goods in which they deal, and obtain an acquaintance with the sellers and buyers as well as with the state of supply and demand, and are thus enabled to bring the dealers together and to negotiate be tween them on terms equitable for both. A merchant who trades in a great variety of goods and products drawn from dif ferent countries and destined for the use of different classes, cannot have the same intimate knowledge, and will consequently find it advantageous to employ several brokers to assist him in making his pur chases and sales. There are separate brokers in London for nearly all the great articles of consumption.
Ship-brokers form an important class in all great mercantile ports. It is their business to procure goods on freight or a charter for ships outward bound; to go through the formalities of entering and clearing vessels at the Custom House ; to collect the freight on the goods which vessels bring into the port, and generally to take an active part in the management of all business matters occurring between the owners of the vessels and the mer ehants, whether shippers or consignees of the goody which they carry. In the principal ports of this kingdom almost all ship-brokers are insurance-brokers also, in which capacity they procure the names of underwriters to policies of in surance, with whom they settle the rate of premium and the various conditions under which they engage to take the risk, and from whom they receive the amount of their respective subscriptions in the event of loss. Should this loss be partial, it becomes the duty of the broker to ar range the proportions to be recovered from the underwriters. The business of an insurance-broker differs from that of other brokers in one particular. Other brokers, when they give up the name of the party for whom they act, incur no re sponsibility as to the fulfilment of the con ditions of the contract, but an insurance broker is in all cases personally liable to the underwriters for the amount of the premiums. He does not, on the other hand, incur any liability to make good the amount insured to the owner of the ship or goods. who must look to the underwriter alone for indemnification in case of loss. Under these circumstances, it is the duty of the insurance-broker to make a prudent selection of underwriters. Merchants frequently act as insurance brokers.
Exchange-brokers negotiate the pur chase and sale of bills of exchange drawn upon foreign countries, for which busi ness they should have a knowledge of the actual rates of exchange current between their own and every other country, and should keep themselves acquainted with circumstances by which those rates are liable to be raised or depressed ; and they should besides acquire such a general knowledge of the transactions and credit of the merchants whose bills they buy, as may serve to keep their employers from incurring undue risks. Persons of this class are sometimes called bill brokers ; and there is another class called discount-brokers, whose business it is to employ the spare money of bankers and capitalists in discounting bills of exchange which have some time to run before they become due.
Every person desirous of acting as a broker for the purchase and sale of goods within the city of London must be licensed by the lord mayor and court of aldermen, and must be a freeman. The number of admissions annually is from fifty to sixty, and the number retiring is about the same. The applicant must present a petition accompanied by a certificate signed by at least six respectable per sons, who must state how long they have known him. He must next attend the court, and answer questions put to him as to his connections and business, and whether he has been insolvent. The question as to his admission is then put, and if carried in the affirmative he is required to attend at the town-clerk's office with three sureties (who need not be freemen), two for his good behaviour as a broker, and one (who may be one of the former two) for his annual payment of the sum of 51. to the city. He is bound himself in the penalty of 10001, two of the sureties for 250/. each, and one for 50/. The annual payment claimed by the city can be traced back to the time of Henry VIII., when it was 40s., but was increased to 5/. by 57 Geo. III. c. 60. When the above conditions have been complied with, the applicant must attend another court of aldermen, when he is sworn for the faithful discharge of his duties, without fraud or collusion, and to the utmost of his skill and knowledge. He further binds himself not to deal in goods upon his own account—a stipula tion which is very commonly broken. It is the indispensable duty of a broker to keep a book in which all the contracts which he makes must be entered, and this book may be called for and received as evidence of transactions when questioned in courts of law. Twelve persons of the Hebrew nation are appointed sworn brokers in the city ; and on a vacancy the appointment is sold to the highest bidder, according to Mr. Montefiore's Dictionary of Commerce, and has some times fetched 1500/. Any person acting as a broker without having procured a licence or paid the fees, is liable to a fine of 1001. for every bargain which he may negotiate. The court of aldermen have power to discharge a broker for miscon duct, but only three cases occurred in the twelve years preceding 1837, in which the penalty of the bond had been enforced. Many persons are allowed to remain on the broker's list who have become bank rupt. The list comes annually under the review of the Committee of City Lands, but solely with reference to the annual payment. There is a condition in this bond, which the brokers are sworn to, that renders it imperative on them to de clare in writing the names of all whom they shall know to exercise the office un authorisedly ; but as few persons are wil ling to appear in the invidious light of an informer, the rule is not observed. The Commissioners of Corporation In quiry remark, in their Report :—" It seems to be the prevalent opinion in the City of London, that some superintendence of brokers is necessary, and that traders, es pecially strangers, are liable to gross frauds if it is not efficient r but they are not satisfied that it is now lodged in the proper quarter, and they doubt, if in the case of stock-brokers, the present condi tions of the sworn broker's bond could be enforced at all. There is an officer, ap pointed by the city, called the collector of broker's rents, who is paid 7,1 per cent on the gross amount collected. His in come is from 2651. to 2751. per annum. He requires the brokers to renew their sureties when necessary, and looks gene rally to the carrying out of the regula tions of the court of aldermen.