By Seymour Eaton.

The general public too often regard the stock exchange merely as a noisy congregation of brokers who gamble in the securities of government and corporations, under the guise of legitimate business. A deeper insight, however, into the character and functions of these institutions will show the important part which they play in the financial mechanism of the country.

The exchanges of the world are instruments of enormous economic value in subdividing and distributing capital and in directing its employment in great commercial and industrial enterprises. When the Wall street man goes down to his office his first inquiry is for the two-o'clock prices on the stock exchange of London, which are received before ten o'clock in New York. The quotations of American stocks, with the accompanying price of consols and the Bank of England rate, give him the financial condition abroad translated into figures by the keenest financiers.

New York has no more entertaining public exhibition than its Stock Exchange. The visitor who, for the first time, looks down from a gallery upon its members in the act of transacting business, is astonished at the turmoil and confusion he witnesses.

There is no reason why bonds and shares should not be publicly dealt in, and in large quantities, as well as dry goods, corn, or cotton. But, unfortunately, few stock exchanges confine their transactions to ordinary legitimate business.

The members are divided into two classes - those who execute commissions for others, and those who deal on their own account. Among the latter are the boldest and sharpest speculators of the day. You will look in vain in the quotations for the stock of dozens of corporations whose securities are among the choicest investments. It is upon fluctuations that stock speculation grows strong, and the largest profits are often made on the poorest stocks.

In London, Paris, Berlin, Vienna, and New York there are very large private banking institutions which buy and sell bonds and stocks on the stock exchanges of the world on commission. These great financial institutions negotiate loans for governments and great corporations and are the intermediaries in all the great movements of capital from one country to another.

The London Stock Exchange has scarcely more than one hundred years of history. In the early part of the 19th century the elder Rothschild was one of the giants "on 'Change," and it was in this business that he amassed the great fortune which makes the name of his house synonymous with money power. The Exchange occupies an old dingy building on Capel Court close to the Bank of England. The membership is not limited to a fixed number, as in Paris and New York.

One of the marked peculiarities of the Stock Exchange of London is the distinction between those who act as agents for the public, and who are properly called brokers, and those who do business on their own account . and are described as dealers or jobbers. On the Paris Bourse all agents are strictly forbidden to trade on their own account. The New York members who operate on their own account are called room-traders or scalpers, whose profits or losses consist in quick turns made during the day. They endeavor to detect immediate monetary influences without considering the ultimate tendency of prices.

Nominally the stock exchanges guard the public interest in declining to admit to their regular quotations the stocks of questionable enterprises. Before any shares, bonds, or debentures can be quoted in the official lists, application must be made in behalf of such issues and their bona fide character must be established.

The membership of the New York Exchange is limited to about 1,100 and seats becoming vacant by retiring members bring prices all the way from $20,000 to $75,000 each. Stocks and bonds sold in the regular way are deliverable to the buyer during exchange hours on the following day. Transactions are quickly collated and rapidly reported to the outside world.

In hundreds of offices in New York City and in other American cities can be seen a little instrument called a ticker, which automatically prints abbreviated names of stocks, with their prices, on a narrow ribbon of paper. These tickers are rented to these offices, as are telephones, by the local telegraph companies, and as fast as the sales are made the quotations are ticked off in thousands of offices in all parts of the United States.

There are many exchange institutions in the country. Nearly every large city has its stock exchange, and scattered in trade centers are cotton exchanges, produce exchanges, petroleum exchanges, mining exchanges, etc.