Pittsburg, Cleveland, Chicago, Cincinnati, New Orleans, Salt Lake City, San Francisco, and St. Louis. The primary function of the stock exchange is, first, to provide a constant market for money and for stocks and bonds traded in; and, second, the establishing of prices based upon information concerning every available condition having a bearing upon value at that place at that time. In this the stock exchange performs not only an invaluable service in the facilitation of business as conducted by modern methods, with the aid of steam and electricity, but one without which the work of the modern business world would be brought to a standstill. The virtual monopoly of the business of speculating, or investing, either for themselves or for clients, enjoyed by members of the New York, London, and Vienna stock exchanges or of the bourses at Paris and Berlin and elsewhere, and the great value of the privilege, have made those marts the most important news centres in the world with respect to everything of material interest to that which may be construed as having a price-making quality; whence the exchange is enabled, by the aid of myriads of newsagency activities of international scope, to approximate, every hour or minute, to that which is accepted as actual value, and which, in the last analysis, becomes the guide to investment. The enormous volume of trading between exchange members, representing for the greater part, with rare exceptions, the business of clients, can never be classified accurately, depending as it does so largely on motive or mental attitude of principals. Investment, speculation, and 'gambling' are involved. Of the first, no definition is neededthe acquisition of an interest in a property for the sake of a share in its net earnings, either as dividends or interest. For an extended definition of speculation, its function, propriety, and place, with reference not only to dealings on stock exchanges and on the 'curb' market in New York city, but on the great commodity exchanges, where grain, cotton, coffee, and the like are traded in, see the article on SPECULATION, in which 'gambling' perversions of the same, and other attendant evils, are explained at length. Details with reference to the curb market are given in the article WALL STREET.

In this day of enormous corporate, public and private enterprises involving highly capitalized railroad, steamship, telegraph, industrial, and public utility companies, such as those for the control of gas, electric power, trolley or other transportation, and tunnel,

mining, and other concerns, the amount of money and risk entering into their promotion, exploitation, and distribution of share and bond ownership is so great that the work entailed would often be impracticable except through the facilities furnished by the stock exchange or bourse. There they are analyzed, criticised, estimated, and tested with reference to condition, opportunity, and outlook, or as to competitive and exclusive features, to the end that the value of the securities is constantly being approximated and a permanent market afforded for their purchase and sale. This is done in connection with a like service for national, state, and city bonds and the lending and borrowing of money on stock and bond collateral at rates based on the world's demand and supply of funds at the moment, from which is established the price for the use of funds both on time and call. Nothing is truer to-day than the use of the expression world-wide or international in describing the scope of the bearing of the larger Stock Exchange money and security markets; for never as now was the fabric of the whole financial world so closely related, so interdependent. As accurately stated in a leading New York financial publication late in 1906, a big crop in Kansas and Nebraska pulls gold out of the Bank of England. A political upheaval in Russia causes a commotion in the New York Stock Exchange,' while their financial and agricultural necessities make Egypt and Argentina 'factors in the markets of London and New York. One financial centre cannot suffer without the others being concerned. The reserves of each must be at the disposal of the rest. London must help New York and Paris must come to the aid of London'-and the most essential mechanism in all this, with the aid of the banks, is the Stock Exchange. The fluctuations in exchange prices are eddies caused by sales by the owners of securities, or by those who sell shares they do not own at the moment, believing quotations are destined to decline; or by purchases by investors or by speculators who regard conditions as favoring an advance. It is the stock exchange members, or those trading through members, who, being investors or speculators, are constant students of conditions and prospective or probable influences, and seek to take advantage of or discount them, and, in so doing, create the vast volume of fluctuations in quotations from hour to hour, from day to day, which register the average of the best expert judgment reinforced by the widest information, as to what a given property is worth. As a consequence, the surplus

funds of the world flow to the greater stock exchanges, or bourses, for investment in the securities of properties upon which the material welfare of the nations depends. While traders may approach these institutions for the employment of the facilities with what may not inaccurately be described as gambling intent, their transactions, as such, are not gambling, for actual purchases and sales are made and paid for. And that those who are at the helm in such institutions are statesmen in the art of banking and finance, requires no argument for him who reflects that upon the successful management of this most important bit of the world's business mechanism depends the prosperity with which are conducted the broader influences for success governing agricultural, commercial, industrial, transportation, and banking activities everywhere.

Traders in shares of corporations, forerunners of the stock brokers of to-day, first made a place for themselves at London nearly two hundred years ago. It is related, that at the time of the South Sea bubble, 1720, London brokers 'carried on their operations at Garraway's coffeehouse in 'Change Alley, and at other temporary meeting places,' out of which grew the London Stock Exchange, the records of which, however, do not go back of 1798. The Paris Bourse was formed in 1724, that in Vienna by imperial decree in 1761, and the New York Stock Exchange in 1792. The London Stock Exchange still holds first place in that securities listed and traded in there represent a larger par value, more international interests, and a wider range of national, state, industrial, and other corporate securities throughout the world. The New York Stock Exchange has been expanding in all of these directions, but lists only one or two foreign company shares and foreign national obligations of only Great Britain, Russia, Japan, Cuba, and Mexico. Only at the Paris Bourse and the New York Stock Exchange are memberships, 'seats,' bought and sold. At Paris a seat of an 'agent de change' is worth $400,000, and membership is limited to sixty, without the privilege of speculating except for clients, and then only in securities listed there. As at New York also, a member of the Paris Bourse must be elected a member, in addition to buying his seat, and the election confirmed by the minister of finance. He must then deposit 250,000 francs with the government as security in case of default, on which he receives three per cent. interest.

Stock Exchange

The principal trading at the Paris Bourse is in French public and corporation securities, in mining shares, in Russian, Turkish, Spanish, Egyptian, and other government obligations, and of late the representatives of $50,000,000 Pennsylvania Railroad indebtedness, the first among so-called 'Americans' to find its way there. The outside Paris speculative system, called the Coulisse, has a very large membership and few of the more restrictive conditions are attached to it. At Paris, as at other Continental bourses, much attention is paid to lottery, loan, and mortgage company shares, of which there are no prototypes listed at New York.

The London Stock Exchange has been in its present quarters since 1802. It numbers nearly 6,000 members, the only requisites being that the applicant for membership be a British subject and vouched for by three members who bind themselves, each, for £500 to indemnify his Stock Exchange creditors, if necessary. The entire membership has to be re-elected annually, both brokers and jobbers, the first class dealing exclusively for others and the second group for themselves, the latter corresponding to what at New York are termed floor or 'room-traders.' The stockticker or exchange and telegraph news service, in the interest of brokers and the public, at London is poorer than at New York, and at Paris none exists. At Vienna this conservatism is increased, and the daily papers do not print the close of the stock market until the next day. But the London stock market is the mart of the world, securities of almost every kind and from every clime being listed and traded in there.

At Vienna, the stock exchange, like the Bourse at Paris and Berlin, is limited as to trading membership, there being only forty licensed brokers or 'Sensale,' who are elected from among the exchange membership at large. The position cannot be purchased and security is given not to trade except for a customer.

A feature which strikes the American as peculiar is the fact that the public are not admitted into any part of the European exchanges, as they are to the visitor's gallery at New York. At Berlin, exchange methods are framed somewhat after those at Paris, dealings being largely in foreign bonds and American securities. Provincial stock exchanges in the United Kingdom and those at other cities than New York in the United States are conducted on much the same lines as those at the British and American financial centres.

463

At the London Stock Exchange business transacted is grouped under the heads of, first, investments; second, speculative purchases and sales of shares, on margins, or covers,' as called abroad, having to do with enhancement of price of the property and handled in much the same way as at New York; third, speculation on the rise and fall of the quotation of shares, in which there is no expectation of actual delivery and payment for the purchase; and, fourth, 'option' dealing, or trading in what in the United States are called 'put' and 'call,' and 'straddle' contracts, or 'privileges.' The purchaser of a 'call' may demand the delivery of a certain stock at a given price (above the market) to a given date. He is therefore a 'bull,' a believer in higher prices, and risks the cost of his 'option' that the quotation will go still higher than that at which he can have it by calling it and paying for it. The 'put' option is the reverse, and is based on the payment of a stipulated sum for the 'privilege' of delivering (putting') to the principal a certain stock at a certain price below the market at the moment, within a specified time, the purchaser being therefore a bear, a believer that prices are to decline lower than his 'put' price, to enable him to buy in the shares for less than the seller of the 'put' has contracted to take them. What the English call a double option' is referred to at New York as a 'straddle,' a combination of both a 'put' and a 'call.' Clients of brokers at the London Stock Exchange who do not settle their accounts prior to the close of the fortnight which precedes 'settlement day,' must arrange to carry over their holdings into another account for another fortnight's run, the cost of which, based on the bank rate and the supply and demand of stock involved, is called a 'contango.' The corresponding cost to the bear who desires to defer delivering the stock he has sold 'short' (i.e. before possessing himself of it) is known as 'backwardation.' 'Settlement day' occurs near the middle and end of each month, four days being so occupied. Deliveries of 'bearer' shares are made the day following settlement day; those by transfer are extended for ten days. Settlements in consols occur once a month. Dealings in 'Americans' (as corporate and other securities from the United States listed at London are called), are continued, after the close at London, in Shorters' Court, adjoining the Exchange. Arbitrage dealings between London and New York concerns form no small part of a day's trading, the business

Stock Exchange

being that of buying and selling by cable between the two markets according as the quotation at one centre gets materially away from a parity with that at the other, the effect of which is to keep prices at both markets close together.

The New York Stock Exchange, which celebrated its centenary in 1892, is not incorporated, but is a voluntary association of about 1,100 members, instead of a stock company like that at London. It is housed in one of the most imposing structures among New York's thousands of business palaces, only recently constructed, not one hundred yards from where twenty-four brokers met under a cottonwood tree opposite Number Sixty Wall Street on May 17, 1792, and signed an agreement as to the rates of commission to be charged. The association so formed met irregularly at the Tontine Coffee House, Wall and Water Streets, but it was not until 1817 that a stock exchange along present lines was developed, and in 1827 the exchange located at Merchants' Exchange, on Wall Street, on the site of the old custom house. Thence, in 1854, after having moved to 43 Wall Street and back again, it found a place at William and Wall Streets; in 1856 at Lord's Court at William and Beaver Streets; and in 1865 on its present site, T-shaped lot, fronting on Broad and New and Wall Streets. In 1869 it absorbed its would-be rival, the 'Open Board of Brokers,' and after the demise of the 'Gold Board,' in 1879, bought the latter's premises and enlarged its own structure. Memberships, or 'seats,' pass by sale, if the applicant is approved by the membership committee. The price of a scat rose from something over $2,000 in 1871 to $34,000 in 1882, dropped to $20,000 in 1892, and since that time it has touched the $95,000 mark, but seats were quoted lower at the end of 1906. The enormous business of the Exchange, as at London and the European continental bourses, is all by word of mouth and dependent on individual good faith. A member's seat is responsible for his debts to other members, in case of his failure. Any or all may trade for themselves or for clients.

a

The Exchange's clearing-house was put into operation on the date of its hundredth anniversary, by which mutual debits and credits in leading active shares are offset one against the other just as foreign stock exchanges employ the system, and as do banks at more than one hundred cities throughout the country and at all European centres. The stocks

and bonds traded in, not subject to the clearings system, are delivered and paid for before quarter past two of the day following the transaction, quite in contrast to the London 'fortnightly account' and 'settling day.' On the exchange floor are posts bearing the names of some of the more active shares, and in the groups of members about each may be found dealers in the same. The exchange's rules are very strict against 'matching orders or varying the rate of commission prescribed. A formal call of the bond list is no longer

trict, but, to a great extent, to men of affairs at the larger centres throughout the country. The 'put,' 'call,' and 'straddle' 'option' contracts, to which reference has been made, are also known as 'privileges.' Such contracts are not recognized on or by the New York Stock Exchange, are considered as essentially gambling contracts, and are purchased from a few speculators of high financial standing who choose to 'bet' on stock market

price variations in that way. The stock market is weak' or 'strong' as demand is falling off

The New York Stock Exchange, Broad Street Façade.

made daily, trading in bonds being continuous in the room set apart for that purpose. Quotations on the stock tickers, to be found in brokers' offices, in banks, and elsewhere, at almost all large cities in the United States, are furnished by attendants to telegraph operators stationed on the floor of the Exchange, and a few seconds later are read simultaneously by a man around the corner and by the occupants of offices at Boston, Chicago, San Francisco, and elsewhere.

The language of the New York Stock Exchange has finally become familiar not only throughout the metropolitan financial dis

or insistent. It is 'feverish' when it is very irregularly active; and, when demand for any stock or stocks is sufficient greatly to advance the price, that is described as a boom.' A 'lamb' is an inexperienced 'client' of a stock broker. 'Margins' are the amounts (usually ten per cent. of the price of a security) deposited by speculators or investors with brokers when dealing in the market. 'Bulls' are those who regard market conditions as promising higher prices, and bears,' the converse of that. 'Bulls' are 'long' of the market when they buy shares in anticipation of a rise, and 'bears' are

'short' when they sell stocks (usually before possessing the same) in expectation of a decline in prices. They then borrow the stocks of which they are 'short' to make a delivery, and when the prices go below the figure at which they sold 'short,' they 'cover' by purchasing the same and returning the security borrowed. When stocks do not decline as shorts'expected, but, by the action of the bulls' or for other reasons, rise instead, a 'bear panic' is said to be the result of the 'bears' having to 'climb' to 'cover' at as small a loss as possible. When a sharp decline hits 'bull' commitments, a 'liquidation' or 'shake-out' often describes the consequences to 'bull' holdings. A slump,' 'reaction,' 'rally,' and 'recovery' in prices require no especial explanation of their meanings.

For the year 1909, the total number of shares traded in at the New York Stock Exchange was 214,425,978, amounting to a nominal aggregate of value of $19,324,230,420. The total par value of state, railroad, and miscellaneous bonds which changed hands there in the same period was $1,253,897,300, and of gov ernment bonds, $771,200. The London Stock Exchange does not publish such information, so no comparison can be made.

On Dec. 14, 1908, Gov. Hughes of New York appointed a committee to investigate speculation in securities and commodities in that state, and the methods and practices of organizations used in such speculative dealings, with a view to recommending changes in the State law to better conditions. This committee reported in June, 1909, with several recommendations which are expected to be incorporated with the state laws in due course. See SPECULATION.

Among references which may be consulted are: Francis L. Eames's History of the New York Stock Exchange; S. S. Pratt's The Work of Wall Street; King's New York Stock Exchange; O. G. Villard's Early History of Wall Street.

Stockholder. See STOCK AND STOCKHOLDER.

Stockholm, cap. of Sweden, romantically situated on islands in Lake Mälar and on the adjoining arm of the Baltic. It is composed of a central portion (Staden); Södermalm, the southern suburb; Norrmalm, the northcrn suburb; Kungsholm, to the West of Norrmalm; Ostermalm, containing the barracks; and Skeppsholm, with the arsenal and headquarters of the Swedish navy. Chief public buildings and monuments-the Riddarholm Church (the Westminster Abbey of Sweden), the Parliament house,

the Rhiddarhus or house of the nobility, the opera house, the royal palace (built by the Tessins in 1697-1753, a vast square in the noblest neo- Italian style), the palace of the governor-general, the crown prince's palace (178393), the Academy of Sciences, the observatory, the National Museum, and the Royal Library, with about 300,000 vols. The city is remarkable for its numerous beautiful promenades and delightful views, especially on the Djurgard, with its outdoor museum illustrative of the national life, and the Scandinavian (northern) museum. The industries include sugar refineries, tobacco, silk, stearin, and tallow factories, linen and cotton weaving and spinning, and iron foundries. Stockholm has a small

Stockmar, CHRISTIAN FRIEDRICH, BARON VON (1787-1863), German statesman and physician, was born at Coburg; appointed (1816) physician to Prince Leopold of Coburg, subsequently holding the positions of his secretary, keeper of the privy purse, and comptroller of the household. He also took part in the negotiations which led to Leopold's marriage with the Princess Charlotte, and to the elevation of Leopold to the throne of Belgium (1831), and was one of those who arranged the_marriage of Queen Victoria to Prince Albert (1840). See his Denkwürdigkeiten (1872), and Juste's Le Baron Stockmar (1873). Stockport, munic., par., and bor, chiefly in Cheshire, partly also in Lancashire, England, 6 m. S.E. of Manchester.

export trade in iron, timber, and tar, but a large import trade. The harbor is closed by ice from three to five months every year. In the environs are several very beautiful royal chateaux in picturesque parks-e.g. Haga, Ulriksdal, and Drottningholm. Stockholm dates its origin from 1187 and 1255. In 1389 it was besieged and taken by Margaret of Denmark. In 1471, almost under its walls, the administrator Sten Sture gained a brilliant victory over the Danes. Christian II. of Denmark took the town in 1520, and in November of the same year massacred hundreds of Swedish magnates and burgesses there in order to crush the national resistance. Pop. (1900) 300,624; est. (1904) 317,964.

Stockings. See KNIT

TING.

Stockton

each other by a hinge at one end. It was formerly used as a means of punishing vagrants, sturdy beggars, and disorderly persons. The feet were placed through holes cut at the junction of the two sections, and the delinquent was left to sit there for a period exposed to the ridicule, and sometimes the missiles, of the parish loafers. The stocks seem to have been introduced into England in the reign of Edward III.

It is built on both sides of a ravine through which flows the Mersey. A viaduct, 1,780 feet long, carries the London and North-Western R. R. over the town. The church of St. Mary, in great part rebuilt early in the 19th century, is an ancient foundation with 13th-century chancel. Vernon Park is the principal recreation ground. There is a bronze statue of Richard Cobden, M.P. (1841-7) for the borough. There are cotton manufacture, hatmaking, iron-founding, machinery, and brewing. The township of Reddish was incorporated in the borough in 1901. munic. bor. (1911) 108,693 Stocks. See STOCK AND STOCKHOLDER; STOCK EXCHANGE.

Pop.

Stocks. Cruciferous plants in the genus Matthiola. Two species, M. bicornis and M. incana, are commonly cultivated. The latter has flowers, fragrant and of vari ous tints of white and rose, often doubled. An annual variety, the 'ten-weeks' stocks, is a favorite.

Stocks, an appliance made of wood, and consisting of an upper and a lower section, attached to

Stockton. (1.) City, Cal., co. seat of San Joaquin co., 62 m. E. by N. of San Francisco, at the head of navigation on a branch of the San Joaquin R., with daily steamer connection to San Francisco, and on the A., T. and S. Fe and the S. Pac. R. Rs. It is an important manufacturing, place with an output of flour, leather, agricultural implements and machinery, cereal foods, woollen goods, window glass,

pumps, engines, wagons and carriages, paper, canned goods, fuel bri quettes, windmills, gasoline, gloves, soap, cigars, iron products, beer, wine, etc. The 1905 census of manufactures returned 110 industrial establishments, with a combined capital of $5,219,963 and products valued at $8,029,490. The city is situated in a rich agricultural and fruitraising region, the produce of which includes alfalfa, almonds, table and wine grapes, and aspar agus. Dairying is also extensively carried on, and live-stock is raised in the district. Stockton is a ship ping point for large quantities of grain. Among the notable institutions and buildings are a public library, St. Mary's College, St. Agnes Academy, a state hospital for the insane, San Joaquin County Law Library, St. Joseph's Home, Pacific and County hospitals, county court house, Masonic Temple, county jail, U. S. P. O. building, and opera house. The city was founded in 1843 by Captain Charles M. Weber, to whom the Mexican Government sold a small grant of land. Stockton received its name in honor of Robert Field Stockton, who took California in the name of the U. S. Government. It was formerly a distributing centre of supplies for the mines of Southern California. Pop. (1900) 17,506; (1910) 23,253. (2.) Post town, Co. Gloucester, N. S. W., Australia, 4 m. N.E. of Newcastle, with limekilns, saw-mills, shipbuilding yards, coal-mining. Pop. (1901) 2,549.