THE CONTINENTAL BOURSES 1. How they differ from American, exchanges.— The Paris Bourse has long been by far the most im portant of the Continental stock markets, and is the second most important international stock market in the world, with total listed securities equalling those of New York. The bourse will be considered later in detail but first it may be well to note the common char acteristics of all the continental stock markets.
On all European stock exchanges the unit of trad ing is less than in New York. The common unit abroad is 10 rather than 100 shares. Cash transac tions are more common, and the margin system is worked out less completely. Marginal speculative operations on all the European exchanges are "for the account," which means, as we have seen in the case of London, that they are to be paid for, if at all, at the end of a given period, usually about two weeks, or else carried over for another period. On some of the bourses the word "futures" has the same meaning as "for the account." Speculative accounts are rare in Europe. The peo ple buy government securities or other investments recommended by their banks, and their speculative in stincts are catered to by lotteries, and occasionally by irresponsible, ungovernable gambling in wildcat shares. Organized speculation is confined far more to a few capitalists and professionals than it is here. Dealings for future delivery have been permitted on the Paris Bourse only since 1885.
The volume of sales in individual stocks and the total for the entire day are not reported abroad. Yearly reports of total sales are made by the Depart ments of Finance in Germany and France. In both countries the bourses are more under the control of the large banks and the government than either in England or in the United States. In a single year the Bank of France deals in scores of millions of dol lars of securities on the Bourse. Speculators also borrow more directly from the banks and less from brokers than in New York. In London and Paris, brokers are forbidden to speculate on their own ac count, altho the London jobber is nothing but a specu lator. Hours are uniformly shorter on the foreign bourses, an extreme case being that of the Amsterdam bourse which is open only from 1.30 to 2.45 p. m.
But the most important respect in which all the European stock exchanges, including London, differ from those in the United States is in regard to settle ment periods. The essential characteristic of the New York and most other American stock exchanges is the daily settlement for securities. In Europe set
tlements are usually made twice a month and in some instances only once a month.
2. Berlin Bourse.—The Berlin Bourse has never been of much importance in itself, largely because the great banks of Germany have absorbed practically all dealings in stocks as well as many other economic functions. There is a horde of small brokers on the Bourse who pay a license fee, but the important men in the institution are the eighty official brokers who make the quotations and are closely related to the Government. Most of these official brokers do busi ness for the banks. Unlike France, England and Holland, Germany has never encouraged the invest ment of its citizens' funds in foreign enterprises, al .tho at various times considerable quantities of Ameri can railroad and industrial stocks have been held in Germany, especially Baltimore & Ohio, and Canadian Pacific. But in the main, Germany has needed all her spare money at home so that Berlin has never be come an international financial center.
Possibly the most interesting feature of the Berlin Bourse is a chapter in its past history, namely, the attempt made some years ago to regulate speculation. This is described in a later chapter. When the war started in 1914 no government was more ruthless in suppressing tell-tale speculation than the German. It believed that dealings in stocks at such a time were opposed to public interest. But so prosperous did some of the war munition makers grow that it became very difficult to stop operations in these stocks, as the following dispatch from Frankfort on July 10, 1916, indicated: Altho no stock quotations are published in Germany at present, speculation at the different stock exchanges in Ger many had lately attained such dimensions that conservative circles became alarmed and cast about for means to restrict dealing in stocks. The Chamber of Commerce in Berlin, supported by the "Board of Elders of the Stock Exchange," submitted to the government certain new regulations, which now have been adopted. They prohibit all transactions in volving deliveries at some future date, permitting only the so-called cash business, which provides the fulfilment of every contract within three days. In order to prevent manipula tion within this limited period all contracts are to be sub mitted to a commission appointed by the "Board of Elders of the Stock Exchange," which is authorized to determine the amount of damages due to the non-performance of a stipulation in the deals.