EXCHANGE. A term applied to an organ ization of merchants meeting at stated times, generally daily, for the transaction of business, as well as to the building in which such meetings occur. llere and in Great Britain a sharp line is generally drawn between stock exchanges, at present the most important form of exchanges and those devoted to other classes of transactions, but on the Continent of Europe this is not the case. There the exchange focuses the com mercial life of the community at one point, and accordingly I he buildings devoted to the pur pose are frequently among the architectural ornaments of the city, as in Paris and Brussels. Whether there is a single exchange or several, the kindred purposes of all such organizations have developed a particular type of building. There is generally a large quadrangular space surrounded by an arcade, frequently with offices opening from the latter. The central space. the `floor,' devoid of furniture—transaetions of large amount being carried in the head or on the simplest memoranda—is reserved for the ac credited members of the organization, while the arcade, or gallery, as the ease may be, accom modates visitors. Offices for the manager and his assistants, and frequently reading and recrea tion rooms for the members, form a part of the equipment of such a building.
Exchanges as organizations are of quite early date, and we have no precise record of their original purposes. It is probable that they grew out of the mediteval guilds of merchants. The latter erected their own warehouses, and in the regulation of their use and the determination of trailing customs and settlement of disputes in such guilds we see types of the activities of the modern exchanges. :Many of the latter were founded early in the sixteenth century, especially in the Netherlands. The Royal Exchange of London dates from 1556, when it was established by Sir Thomas Gresham. Wherever they exist exchanges are primarily organizations of mer chants with more or less recognition and control by the Government. In England and the United
States they are simply private corporations chartered by the State, but on the Continent of Europe the Government takes an active part in their establishment and administration.
The main characteristic of dealings in ex changes is the fact that the goods dealt in are not physically present. There is not, as in the ease of sales in a private establishment. op portunity for inspection of goods. It follows. therefore, that exchanges deal in standard goods only, or rather in such as may be definitely de scribed. The purchaser of goods on an exchange does not buy specific goods, but rather a specific quantity of goods of a definite character. It is this feature which adapts the exchanges in so marked a degree to speculation. Persons buy and sell without contemplation of future de livery, hut with reference to a future price. Settlements are expected and made, not by de livery of the goods. but by adjustment of the difference between the contract price and the price ruling in the market at the maturity of the contract.
Stocks, bonds, cotton, wool, grain, hides, pro visions, and a few other commodities can be bought and sold in this fashion. Of these, the first and second are particularly adapted to such transactions, and stock exchanges are ac cordingly the most widely disseminated form of exchanges. In the 'United States separate ex changes generally exist for them, while the other commodities may be handled by a general prod uce exchange, or by separate organizations. de pending upon certain historical antecedents or upon the importance of the staple in question for the trade of a particular place.
Stock exchanges and produce exchanges have many points of organization and procedure in common, but as stock exchanges are treated in a separate article, we shall confine our explana tions here to produce exchanges, illustrating their methods and purposes by some account of the New York Produce Exchange.