Stock Exchange, a place where stocks are bought and sold. In England the term stocks is confined to government stocks, annuities, etc, and the term shares is used for the capital or stock of railroad, banking, and other companies; but in the United States bonds representing national, state, county, and city debts, and the shares of railroads, banks, mining, manufacturing, telegraph, and insurance companies, are all called stocks. In France the word rentes has the same limitation as stocks in England. Dealing in stocks, bonds, and annuities is the business of the stock exchange, and the dealers in them are known as stock brokers and stock jobbers. In New York the traffic in stocks is of two kinds, the regular sales at the first and second boards, and the operations of the street. The first are legitimate, and the sales are presumed to be bona fide; the second are generally speculative, and are often mere gambling or betting by men without capital. The board of brokers in New York is composed of more than 1,000 regular members, who at their two daily sessions, either on their own account or as brokers for others, purchase or sell the various stocks which are called in order.
The president, secretary, treasurer, and governing committee of 40 members are the executive of the exchange, and can admit, suspend, expel, and readmit members. Next in importance is the sub-committee of arbitration, which decides all disputes arising from transactions between members. When a member fails to deliver or pay for stocks as agreed, his name is struck from the list; but he may be reinstated upon effecting a settlement with his creditors. The New York stock exchange is the wealthiest organization of the kind in the world. The par value of annual sales made at the boards and "over the counter " is estimated at more than $22,000,000,000; but this enormous sum covers all sorts of speculative transactions, including those where no actual transfer of stocks occurs, and "differences" only are paid or adjusted, these operations forming in fact the bulk of the business in Wall street. The rules of the exchange are very strict, and cover a rigid scrutiny of all securities, a systema-tization of the brokerage business of member with member, a surveillance over members in respect of their fidelity to contracts, and a stringent examination of the character and responsibility of candidates for membership.
An applicant for membership must be 21 years old, a banker, broker, or stock dealer in New York for one year, or a clerk to a member for two years, or a member in good standing of the Philadelphia, Baltimore, or Boston board. The initiation fee of a member admitted by election has recently been fixed at $10,000, and of one admitted by transfer at $500. During business hours the board is in constant communication with the financial centres of Europe, and the brokers pay $1,000,000 a year for telegrams from London alone. - The stock exchange has its own peculiar terms, not generally understood by outsiders. Among those in most frequent use are "long" and "short," expressing individual excess or deficiency in the holding of a specified stock for speculative purposes; and "bull" and "bear," designating those respectively who find their interest in operating for a rise or fall in the price of stocks, or who, foreseeing either a rise or fall, take measures to protect themselves or make a profit on the "turn of the market," The bull endeavors to appreciate or " toss up," and the bear to depreciate or " pull down " the price.
The phrase "buyer's option," added to the memorandum of a sale of stocks, implies that the purchaser who buys at 30 or 60 days can call for the delivery of the stocks at any time within the period by giving one day's notice and paying interest at 6 per cent, up to the time he calls. Such purchases are usually made at a little above the cash price. "Seller's option" is a little below the cash price, and the seller has the right to deliver on any day within the limited time, by giving one day's notice, receiving interest up to the time of delivery. A "corner" is an operation by one or several brokers, who form a clique to compel others to pay a heavy difference on the price of stock. Sometimes the clique purchase gradually a large amount of stock on time, buyer's option; they next sell nearly the same amount on time, seller's option, so as to secure an eventual market for their stock; then buy for cash, thus raising the price, and make a sudden call for the stock they have purchased on buyer's option, which, if they have calculated correctly, compels the parties from whom they have purchased to buy of them at a high price in order to deliver at a low one. "A point," the first element of successful speculation, is trustworthy private information concerning a certain stock, such as whether a bull movement is organizing, or an extra dividend is to be declared, or new stock is to be issued, or any other cause is likely to affect the price.
A "lame duck" is a broker who is unable to respond with the shares or money when contracts mature. A " spread eagle" is the operation of a broker who sells a large quantity of stock on time, say GO days, buyer's option, and buys the same quantity at a lower price, on the same time, seller's option. If both contracts run their full time, he makes his difference; but if the buyer or seller calls for a settlement before the time, he may be seriously embarrassed. The "street" or the "curbstone brokers" are not governed by as strict rules, and their operations are mostly speculative. "Put," "call," "ballooning," "saddling," "unloading," and more than 40 other terms make up the dialect of the exchange. - In the Paris bourse there are 60 agents de change., appointed by the government. Each must deposit 125,000 fr. in the national treasury as a guaranty of upright conduct, and also 100,000 fr. with the syndicate of the bourse as a cautionary fund applicable to losses sustained by the customer through the broker's fault. A broker's seat is worth from 1,500,-000 to 2,000,000 fr., and cannot be sold without the consent of the governing committee. There are 60 courtiers de commerce and 8 courtiers d' assurance, who transact much of their business at the bourse.
The haussiers and baissiers correspond to the American bulls and bears, and the coulisse to street or curbstone operators. Cash sales are infrequent, and the greater part of the business is " privilege," technically marche d prime, the buyer deciding on the 15th and 30th of the month whether he will take the stock or not, but in either case having to pay the premium. The time transactions are usually " the end of the current month," or the end of the next month. The 4th of each month is settling day. The parquet is in session from 1 to 3 P. M. every day; the coulisse is in session through the day, and it includes a large number of female jobbers and speculators. The London stock exchange numbers nearly 2,000 regular members, who must be reelected annually. Each member pays £10 yearly, and three members give security to the amount of £300 each for a new member. - The excitement at the hour of "high 'change," in London, Paris, or New York, is often such as beggars description; several hundred men are shouting, calling out what they have to sell or what they wish to buy, at the top of their voices, all together, and leaping and gesticulating, almost as if insane; in speculative periods, immense sums are made or lost in a few minutes.