The Sun.
London, England, 1841-12-06 00:00:00

_
STocK EXCHAN GE BUSINESS,

(From the 1 "imes-)
A country correspondent h aving requested u.s to
afford him and other rural capit
Mists some insight into
_the forms and regulations accord. 'Di? to which the pur-
chase. sale, and " carrying over" e f stock and shares
are effected by the brokers belonging' to the " Stock
Exchange," we proceed, in compliea ee with his re"
quer, to lay before our readers the 1.0 formation re.
i quir.ot in as clear and concise a form as posiible•
This curious and complicated subject ma; be ax-
inlained and discussed under three different hcachi--viz.,
ft rst, the parties engaged in stock transactions, whe-
ther brokers or jobbers; secondly, money and time
bark-ains ; thirdly, the lutes and regulations by which
these operations are conducted.

The clearinghouse is Lombard-street affords the
greatest facilities to the transactions of the Stock Ex-
change, inasmuch as, without its intervention, difficul-
ties and embarrassments would present themselves in
the final settlement on adjustment of those transactions,
of an almost insurmountable character. By means of
this clearing-house, all the great monetary transactions
of the day are brought to a close by five o'clock in the
afternoon, whereas, in the ordinary mode of paying or
receiving money, whether in notes or hard cash, their
settlement might not be finally effected for several days
afterwards, to say nothing of the security afforded to all
parties concerned by the operation of the Clearing-house.
The members of the Stock-Exchange are divided
into two distinct classes—viz., the brokers and the job-
bers. It is the business of the brokers to receive and
to execute the orders of merchants, bankers, capital.
fists, and private individuals, who are" out of the house ;"
the Stock Exchange being amongst its own members
honoured with that dignified appellation.
The jobbers remain stationary in the "house," and
ready to act upon the orders thus received by the
brokers. And here it may be as well to explain
the nature and character of the business transacted
by these jobbers, who, being men possessed of more
or less capita!, endeavour to turn it to account in
the manner we are about to explain. It is their
business to be always prepared to make a price
to the brokers whenever the latter present them-
selvN ; the readiness which they display iu offering
to do business to large amounts at the apparently
small difference of one-eighth per cent. would appear
extraordinary, were it not that they are so numerous
that an eager competitiin is excited amongst them for
the favours of the brokers. When one of the ltlter ap-
pears in the market, he is surrounded by a knot of job-
bers, who announce themselves ready to buy or sell
whatever amount of stock he has to deal in at a price
varying only one-eighth per cent. For instance, if a
broker has to do business in 5,0001. Consols (the market
price being about 90), the jobber offers to buy his .5,000/.
at 90, or to sell him hat amount at 90k, without being
in the slightest degree aware whether the orders of the
broker are to buy or to sell, and thus taking upon himself
the risk of selling that which he does not possess, or of
buying what he does not intend to keep ; his only object
being to undo his bargain, at a difference of one
eighth per cent. (or even less) with another broker,
who may have to effect an operation the very reverse of
the other, which one-eighth' or even one-sixteenth con-
stitutes his profit.
The business of the jobber is one of loss as well as
profit : he would soon grow rich were be sure of reali-
zing his one-eighth per cent. on all his transactions. Her
runs, however, considerable risk, inasmuch ,as, after hav-
ing concluded a bargain, and whilst endeavouring
to obtain a profit thereon, the market may sud-
denly change, either in consequence of extended
sales or of continued purchases by other indivi-
duals ; he is thus exposed to a loss. A. clever and
experienced jobber will, however, oftere extricate
himself from his unpleasant and awkwai-cl situa-
t;on, either by borrowing stock to deliver to the
broker, or money wherewith to pay for the stock
(as the case may be) ; and thus wait for the wore
favourable opportunity of undoing his bargain. He
may also have recourse to an " option," a transac-
tion, however, which besides being illegal and not
recognised by the Committee of the Stock Exchancte,
is chiefly confined to the speculators within th'e
house, and is, moreover, so intricate and complicated;
and at the same time depends so much upon the opinion
and caprice of the parties who deal in them, that any
explanation respecting it would be extremely difficult,
if not utterly superfluous.
ithout the intervention of the jobber, therefore,
it will be seen that there would exist a vast diffi-
culty in effecting the transactions which daily take
Place : the jobbers are, in fact, the " middle-men,"
who stand in the house in the character of dealers,
always ready to buy or sell, thus obviating the ne-
cessity of the broker's going in quest of a second
broker, with whom he might transact his business ;
or in other words, whom it might suit to i'luy what
the other broker had to sell, or vice versa. .Again,
even if one were at band, he might not be able to
concur in the actual amount of stock whicis the
other wished to deal in, whereas the jobber is ready
to do business to any amount, even to the smallest
fraction, and hence a great deal of time is saved. It
often happens that a broker who has to dispose of
shares not currently dealt in, is frequently obliged
to wait for months before he can find a purchaser ;
whereas, in the case of stock, the jobbers offer theme
selves as buyers or sellers at a moment's notice, and
thus offer facilities for transactions in the public funds.
which could not be effected without them.

Having thus endeavoured to explain the difference
between broker and jobber, and confined our atten-
tion hitherto to money transactions, we next pro-
ceed to describe the nature of " time-bargains," which
form so essential a feature in stock business. Indeed,
the very existence of the Stock Exchange, as at
piesent constituted, depends upon speculations in
time-bargains, for where there exists a body of 600
members, the actual bona fide business would not be
sufficient to provide employment for them all, not-
withstanding the magnitude of the national debt.
Time-bargains consist of purchases and sales of stock
made for a certain fixed period, regulated by the
Committee. There can be little coubt that they had.
their origin in the business which has always been
transacted in the funds during the periods when the
stocks are shut. For instance, Consols usually close
about the beginning of June and December ; that is
to say, the transfer books at the Bank are shut for
the space of five or six weeks, in order to afford time
for the preparation of the dividend-warrants, which
are paid in the following July and January. Hence
it is clear that a person wishing to buy or sell that
particular stock during the period referred to, would
be unable to effect his object ; but in order to secure
1 the price of the day, he buys or sells the stock " for
the opening"—that is, for actual transfer on the day
on which the transfer-books are re-opened- This
mode of doing business is legitimate enough, but this
practice has no doubt given rise to operations of the
greatest magnitude, founded, not on actual n ecessi-
ties, but merely on speculation ; and this method
being found convenient for one period, has been con-
tinued on other occasions, without, however, possess-
ing the same pretext for its adoption. Periodi cat
weeks,si m i lar to
making the "
dates have, consequently, beoaeplnteongifinegath”eedratuapibnootneurtvbaylitghhootf
as they are called, in the tours e of
:„C‘hoseettnittmaiintsgtiexed,ays,,,
the year. On these " settling days" are arranged and
adjusted all the bargains made during the preceding; six
weeks, for that particular day ; those who sold st;ock
having to deliver it on the one hand, and those who
purchased having to accept and pay for it, on the alter.
Budte as
in
g the
either
majorityth eoonfetho
r
e the speculatorsothe r,their havebargains noin t e ohs
ai ovn
of .
ing been of a purely speculative character, founded on
their anticipations of a rise or fall in the value of the se-
curities, so whatever difference may exist between the
price at which a party commenced his speculation, and
that at which he finally closed it, is settled on this im-
portant day ; and his operations most likely not ha wing
been confined to the same jobbers, but having bee' a ef-
fected saith several, it becomes necessary to bal anco
them with the parties concerned, and much the same
process takes place on this occasion as that practised at
the bankers' clearing-house, by establishing balances
between each other. Whatever balance remains un-
settled is adjusted by the names of the bona fide pur-
chaser of the stock (who intends to pay far it) being
passed from one broker, or jobber, or speculator, to an-
other until it comes into the hands of the party who in-
tends to deliver or transfer the stock, by which means
all the intermediate persons through whhos.e hands it
by the purchase r eing
on marked
passeshe (ttihekeeporicaeregn
enabledic to close their accounts with
eacht
other at that particular price, and to pay and re-
ceive the differences accordingly. In short, all trans_
actions kept open until the settling-day must then
be closed, and the party who delays this operation until
the last moment is often exposed to a loss, from the dif-
ficulty of finding others, who, having adjusted their owe
accounts, are unable or unwilling to enter into a fresh
transaction on this " day of reckoning," whereby he is
compelled it in t
topayh something extra in the price to those
who have their power to afford him this facility, in
order to enable him to settle his account.
But,
call
as
smg bona of the bargains made for this particular
day arc onn fide transactions, the stock bought
it usually
and sold being in point of fact delivered by the actual
holder and taken by the new purchaser, let us briefly
confined to a
explain how this is effected. This process is one of
dailysettling-clay,
t l i
ng-d
a 3,, occurrence,
althoughan d
on such
is
snot
necessarilyoccasions
amounts to a considerable item, from its having ex-
tended over a wider period. In either case, however,
the following is the way in which the matter is settled
between the broker and his principal who has sold stock :
—The broker usually passes his check for
of the sale to his principal, taking the precaution of
crossing it—i.e., writing a banker's name across the
check. When, however, Bank of England notes are
demanded in lieu of crossed checks (as is sometimes the
case), the bargain is made accordingly : in this case, tba
jobber who buys the stock provides them either by bor-
rowing of those who happen to have large balances at
their bankers, or from their own private bankers. The
notes so borrowed by the jobber are then paid over to
, the broker, and by him to his principal, This operation

is, however, seldom resorted to by men of business
where there is no reason to doubt the credit of the party
drawing the check.
The jobber, on the other hand, having sold the stock
to some other broker, who buys for his principal, re-
ceives, in return, his check ; so that, by this simple pro-
cess of passing four checks—viz., that of the purchaser
to his broker, that of the broker to the jobber, that of
the jobber again to the broker who first sold the stock,
and that of the latter to his principal, the whole trans-
action is completed.
To advert to another technical peculiarity appertain-
ing to the stock Exchange, which may appear puzzling
to the unitiated. The terms" Bull" and " Bear" are
doubtless familiar to most even of our country readers,
without their being aware, probably, of their meaning.
A " Bull" is one who speculates for a rise, whereas a

" Bear," on the contrary, is he who speculates for a
fall. The " Bull" would, for instance, buy 100,0001.
Consols for the settling-day, or, as it is technically
termed, " for the account," with the object of selling
them again during the intervening period at a higher
price. The " Bear," on the other hand, would sell the
100,0001. stock (which, however, he does not possess),
"for the account," with a view of buying them in for
the purpose of balancing the transaction at a lower
price than he originally sold them at. In stirring pe-
riods, when fluctuations of 4 or .5 per cent. often occur
during " one account," vast profits may be realized, or
equal losses sustained, by these gambling operations.
The transactions in the foreign market arc carried on

much in the same way as in that of the English stocks,
with the exception that the settling days are much more
frequent, occurring, as they do, once in every fortnight.
The Foreign " House" is quite of modern origin, but it
is subject to the same rules and regulations as the Eng-
lish, with a few exceptions. The dealings are there
carried on in all the foreign stocks, as well as in railway,
mining, and other shares. The jobbers are distinct from
those in the English house, although there is nothing to
prevent them from dealing in both, if they possess suffi-
cient intelligence to enable them to give their attention
in two places at once.
In connexion with time-bargains may be noticed that
important branch of business which goes under the de-
nomination of " continuation," or " carrying over." This
is nothing more than interest for money borrowed or
lent on security of stock. The rate of this continuation
or interest varies according to the abundance or scarcity
of money, and the nature of the security offered. For
instance, on British stocks, even when money is very
scarce, it seldom exceeds the rate of 5 per cent. per
annum from one account to another ; whereas, in the
foreign market, where the security consists of foreign
bonds of various and doubtful descriptions, it ranges
from 5 to 10 per cent., or even more, on particular oc-
casions, when it reaches 15 per cent. per annum.
There are several causes which tend to produce this
extraordinary variation in the rates of continuation; for
in the case of Consols, which constitute the only stock
for speculation in time-bargains in the English market,
the price varies so little in comparison with the value
of the stock, in the course of an " account," that the
security is considered good in itself; and, therefore, no
extra charge is superadded by the party who lends his
money. This is not the case with regard to foreign
stocks, which are constantly fluctuating in value, a fact
te, be accounted for by the extremely precarious nature
of this description of property. Most of the bonds in
circulation in the fore;gn house have ceased to bear any
interest whatever, and many of them bear upon them
the marks of their shame and disgrace in the shape of
the arrears of interest called " coupons," overdue for
several years. It is not, therefore, to be wondered at,
that foreign securities of this description do not com-
mand the same credit as our own English stocks, and
it must hence follow as a matter of course that parties
who wish to raise money upon them must consent to
pay a higher rate of interest for the accommodation.

A great deal of business is transacted in this way,
and some brokers, who possess the means of obtaining
large sums of money without much difficulty, devote
their entire attention to it. The process by which the
operation is effected is simple, both in the English and
foreign market. The present rate of continuation in
the Consol-market is 9.l6ths per cent. until the open-
ing ; and if a person, we will suppose, wishes to lend
money on that stock, from the shutting (on the 2d
of December) to the opening (on the 14th of January,
1842), his broker procures him 1,0001. Consols
as security, for which he furnishes the money at
the actual price of the day, whieh is 90, making
9001., and re-sells, at the same time, the said 1,000/.
stock for the opening (on the 14th of January),
at 90 9-16, making 9061. 12s. 5d., and thereby
leaving a difference in his favour of Si. 12s. 6d.
for the loan of:9001., dudeg the above period of forty-
four days, which will be found to be at the rate of
Si. 3s. Bd. per cent, per annum. On Foreign securities
the principle is the same : supposing he lends on the
security of Spanish Bands, he receives assecurity 5,1001.,
for which he pays on the 30th of November, at the
price of 24i per cent., 1,2491. 10s., but sells it to the
same party for the 15thof December (the next settling
day) at 24 9-16ths producing 1,2521. 13s. 9d., leaving
a difference in his iavour of 3/. 3s. 9d., or 1-16th upon
the stock bought and resold, which for 15 days, is equal
to per cent, per month, or 12-Bths per cent. per
annum, equal to 76/. 10s., being at the rate of about
61.25. 6d. per cent. per annum interest. This calculation is
made upon the current rate of interest for the " con-
tinuation " of that stock on the 20th of November,
which was considered as extremely low.
The continuation on shares, in which a great deal of
business is also done, varies but little from the above ;
but a difficulty here arises which offers a great obstacle
to the lending of money for abort periods.
The stamps, which by law are necessary for the due
transfer of property of this description, and without
which transfer there could be no security to the lender
of money, are so onerous, and press so heavily on all
bona fide transactions, that, notwithstanding the many
attempts made at various times to evade them, they
operate materially against the parties who lend money
upon them, and, in fact, neutralize all profit for short
periods.

Persons who have sold shares or stock, if they are
not in immediate want of their money, frequently
avail themselves of this method of " continuation"
in order to obtain interest for it, until they actually
deliver the stock. On the other hand, speculators
for the rise are by this means able to carry over their
purchases from one account to another ; and al-
though it may appear strange that they should be
paying at the rate of 5 and even 10 per cent. per an-
num interest on a stock which, in the instance of Con-
sols, pays them actually nothing ; still, when viewed
solely in the light of speculations, the rise in either se-
curity, if it take place, will more than compensate for
this apparent inconsistency.
The proceedings of the Stock Exchange are regu
lated by a Committee consisting of thirty members, who
are elected from the general body every Lady-day, each
member having one vote. They take care that the
rules and regulations enacted for the admission and ex-
pulsion of members, and for the settlement of disputes,
are properly observed, and although some of their laws
are at variance with the established laws of the country,
they are not so strictly enforced by the Committee as
to bring them into collision with the courts of justice •
y
they fully answer the purpose for which they were in-
tended, and all the members, previously to their ad-
mission, subscribe to the conditions there laid down.
All members, on being admitted,ea aret ob,liged_ to ro-
duce three securities of 300/,
years of their probation, which
9001. becomes
the first
.two
goes. t forfeited
in the event of their failure, and
of
fthteh creditorsh.
of the new member. In conseqenceo
business,eir oneloweg
interdicted from engaging in any other
coming members of the Stock Exchange, they no
laws, and; therefore,are i
longer subject to the Bankrupt
the event of failure, all their assets are secured to thne
creditors in the house, to the exclusion of those out of
it. This rule is enforced in order to secure the house
from the loss which would ensue to its members, were
the legal creditors (if any existed) to step in and lay
,ors
claim to their property.
The tendency of the above regulation is to insure
honesty amongst its members. Should any principal
hale reason to complain, he has only to appeal to the
Committee, who instantly take cognizance of the
matter, and subject it to the strictest investigation.
Defaulters whose conduct has been dishonourable are
punished, and an example is made of them by publicly
affixing their names in the house on what is termed the
" black board." This is the heaviest disgrace which a
member can possibly experience. Such is the manner
in which the business of the Stock Exchange is carried
on and transacted.

NEW TELEGRAPH TO THE DOWNS.—This
new telegraph being now completed, preliminary experi-
ments as to its working have been tried throughout the
N., hole lino for the last two or three days, which have
been found to answer the most sanguine expectations.
During the experiments crowds of persons have :,een
attracted on London-bridge, to witness the working
of the telegraph at its terminus, on the sum-
mit of the tower at Topping's Wharf, Tooley-street, a
height of upwards of 150 feet. It will be opened un the
_lst of January, 1842. The intermediate stations are on
elevated spots at Forest Hill (Peckham Rye), Knock-
holt Leeches, Wrotham, Blue Bell Hill, Chatham,
Isle of Sheppy, Whitstable, Herne Bay, Minster,
Broadstairs, and Deal. The code of signals to be
used are the invention of Lieutenant Barnard Watson,
Loyal Navy, and will be similar to those established
between Holyhead and Liverpool. The arrival of
a ship Off the Downs can be communicated to the
terminus, at London-bridge, in the short spaee of five
minutes. Other lines are also at the present moment in
active preparation, and telegraphs have been erected at
Skerza Head, Peterhead, Pentland Firth, Flamborough
Head, Yarmouth, Orfordness, North Foreland, St.
Catherine's Point, and the Needles (Isle of Wight.), Old
Head of Kinsale; all of which will be in communication
with the London line.
On Tuesday afternoon last a lighted lucifer
match was introduced into the letter-box of the Bir-
mingham Post-office, and one letter was destroyed before
the fire was discovered by the eF'rk in attendance. No
clue has pt been obtained to the perpetrator of the dia-
bolical attempt, but the authorities are not without hope
that the
ser miscreant may be apprehended.—Birmingham
Adverti.