THE LONDON STOCK EXCHANGE 1. Importance of the London Stock Exchange.— As with so many other institutions, a thoro lmowledge of the American stock exchanges depends upon having a clear idea of how the same organizations operate in England and upon the Continent. Americans have just reason to be proud of the elaborate and easy running machinery of the New York Stock Exchange. In some respects it is superior to any in the world. But it is not so large as the London Stock Exchange and in many respects it is not so important. The more closely an American investigates the London market for securities the less boastful does he become of his own institutions.
In many points the London and New York stock exchanges are similar and are in sharp contrast to those on the continent of Europe. But then again it will be found that London, Paris, Berlin and Am sterdam have much in common that is wholly un familiar to the practice of brokers on this side of the water.
2. Effect of the .war.—The war has wrought great changes in the European exchanges, or bourses as they are more commonly called on the Continent. Only one of the neutral European countries, Holland, had a bourse of any importance when the war began and naturally its business has grown. But upon the three great markets of Europe, those of London, Paris and Berlin, the war has placed innumerable restric tions. For a long period they were entirely closed, and early in 1918, the publication of stock quotations was still forbidden in Germany. The Paris Bourse too, has not yet recovered its former greatness.
On the London Exchange the alterations due to war are far too numerous to be even mentioned. For the purposes of this Text what is needed is a working knowledge of the great London market in normal times, rather than a description of war-time develop ments, in order to compare conditions with those of this country. Among the changes which have taken place are these: Expulsion of a great number of members of German origin; enlistment of several thousand members; the passage of complicated rules forbidding all trading in securities issued in enemy countries or even in the issues of neutral and allied countries when they are owned by citizens of countries with whom Great Britain is at war, and the enact ment of measures to force Britishers to sell foreign securities and to buy only British securities, chiefly government bonds. The restrictions placed upon the
London Stock Exchange quickly forced its New York cousin into the world's first place. Just how far the London market will resume its former premier posi tion after the war it is now impossible to predict. But certainly normal conditions will be restored to a large degree; and a brief study of them is essential to this Text.
3. International scope of the London Exchange.— Since the war, the New York Stock Exchange has taken on many foreign securities, but normally the London Exchange carries on incomparably more in ternational transactions. Dealings in foreign govern ment bonds, railways and countless other enterprises play an exceedingly important role on the London Stock Exchange. One may gather an idea as to the variety of foreign trading done by reading the names of a few securities gathered from the London Daily List, the official register of the London Stock Ex change: Cape of Good Hope debentures; Municipal Stocks of Pernambuco; Harbor Board Mortgages of Oaman and Wangamii, Honduras loans, loans to Brazil, Argentine, Siam, Costa Rica, Portugal, Straits Settlement, etc.; Malacca Rubbers, Singapore Electrics, Amazon Telegraphs, Sao Paulo Match Fac tories, etc. Until the war England always had an available supply of loanable capital at her disposal to lend to undertakings carried on in distant parts of the world.
The London Stock Exchange has four or five times as many members as its New York rival and quotes nearly 10,000 securities, altho those actually listed are about 5,000 as compared with 1,600 in New York. While in certain respects the London market is far broader and vaster than that of the New York Ex change, in other matters its machinery seems more antiquated and clumsy. Speculation is more active and sustained in New York but curiously enough the Britishers are more inclined to occasional excesses or manias of speculation.