Formerly the basis of quoting stocks was percent ages instead of dollars, as now. It was all very well if the par value happened to be 8100, but it was very confusing if the par value was $50. According to both the old and the new system a $100 par stock sell ing at 75% and at $75.75 is the same thing, but a $50 par stock which sold at 160 under the old system really was selling at $80 a share.
In the process of bidding and asking above de scribed, the seller finally offers a price that is agree able to the buyer. The latter shouts "Take it," and each makes a simple memorandum upon a little pad which he carries in his hand, as to the number of shares "bought" or "sold," as the case may be, the price, the name of the security and the name of the broker with whom the deal is closed.
It must be understood that no stocks or bonds ever appear on the floor. They are not transferred or delivered there. The only business which takes place on the Stock Exchange is that of making contracts to buy and sell securities and money at some later date ; the actual delivery and payment always takes place elsewhere. These contracts are commonly known as "sales." They are also called "transactions," or "dealings." The total sales of any one stock or of all stocks, in any given period of time, is known as the "volume." Newspapers, tickers and all other reporting agencies in adding up the total, properly take one side of the account only, altho for every buyer there is a seller, and for every seller, a buyer. If A sells 100 shares of Union Pacific to B, they are not counted as 200 shares, because A has sold B 100 shares and B has bought 100; they are recorded simply as 100.
5. Floor brokers who actually buy and sell on the Exchange are known as "floor brokers." A Stock Exchange firm may have a score of broker partners, only one of whom is a member of the Stock Exchange. The partners who are not members would no more be admitted to the floor than an outsider. This fact cannot be too strongly emphasized. The firm of J. P. Morgan & Company belongs to the Stock Exchange, but only one of the dozen partners, thru membership in the Exchange, would be admitted there. On the other hand, some firms have six or seven Exchange or floor members.
Except in dull markets, floor brokers do not walk back and forth from the Exchange to their offices to get their orders; they communicate by means of the private telephones already referred to. Their atten
tion is called to their telephones by means of a simple device: each member has a number high on the wall of the floor room usually covered by a disk, and when any one in his office wants to give him an order, a telephone operator at the Exchange presses a button which drops the disk and reveals the number. The floor broker who is constantly on the watch is thus notified. He does not even need to leave the floor to go to his telephone, perhaps fifty feet away, for there are hundreds of messenger boys who dart to and fro between brokers on the floor and the clerks who operate the telephones. Thus floor brokers can get into touch with their partners, customers and of fices almost instantaneously, and without leaving the floor at any time.
The brokers usually gather about 9.30 a. m. The Exchange opens for business at 10 a. m., at the ringing of a bell, and closes at 3 p. m., except on Saturday, when it closes at noon. There is usually a rush of orders to execute at the "opening," which means the first few minutes after ten o'clock, and the "tone" of the market at the opening is considered impor tant.
6. Classes of brokers.—After a man becomes a member of the Exchange, there is no hard-and-fast rule whatsoever as to the particular kind of business he shall engage in. There are many different kinds of transactions, however, to be carried on, and each broker generally confines his activities to one or two classes. Some of the nine important classes of brok ers may be considered.
7. Commission brokers.—The most common type of broker, the member who, by himself, or in partner ship with other brokers, devotes the greater part or the whole of his time to the execution of orders for buying or selling for customers, is called a commission broker. He maintains a large office and a consider able force of employes by means of the commissions and the other items received from his transactions. Very often the commission brokers have so many accounts and so many customers that it is impossible for them to execute all their orders. This is especially the case when the market is active. The floor mem ber, or members, of a firm may find that there is an overwhelming rush of orders especially at the "open ing." At such time they employ "two-dollar" brokers to help them.