THE MARKET-PLACE
The market-place, where the dealing in this mass of securities is
carried on, is by no means of imposing appearance from the exterior
point of view. Of all the Stock Exchanges, Bourses, and Bolsas
throughout the country and the world, the London Stock Exchange makes,
perhaps, the least exterior show. The tourist often seeks it in vain,
and thousands of Londoners pass it every day without knowing that behind
the suites of offices, with their Portland-stone walls relieved by
granite, is hidden the mighty market-place. Yet, for its purposes, the
Stock Exchange, or the House, as the members and even the Rules
affectionately term it, could not be better situated. It is in the very
heart of the City. Its west door, the Capel Court entrance, which is the
most important by tradition though not by usage, faces the eastern end
of the Bank of England, and the building occupies the greater part of
the triangle which has Bartholomew Lane for its base, Throgmorton Street
for its north side, and Threadneedle Street and Old Broad Street for its
south side, the apex of the triangle being formed by the junction of
Throgmorton Street and Old Broad Street.
As to the interior, it is without form, though anything but void in
business hours. There is no trace of the triangle to the insider, the
boundary lines being broken where the surrounding offices abut, or where
they have been swept away as opportunity offered for the extension of
the Stock Exchange proper. Although the site, including the surrounding
offices, occupies some 40,000 square feet, the Stock Exchange itself is
only about half that in floor area. The whole design of the interior
architecture, Italian in style, is marked by a good deal of solidity.
The walls are for the most part covered with marble, the peculiar
veining of which suggested the title, Gorgonzola Hall, by which the
Stock Exchange is sometimes known. Massive pillars, also marble, abound.
The floor is of teak, oak, which was formerly used, having been found of
insufficient durability to stand the wear and tear of the members' feet.
The feature of the interior architecture, however, is the dome, 70 feet
in diameter and 100 feet high, covering the central octagonal area.
Beneath the Stock Exchange proper, and extending to almost the same
area, is the Settling or Checking Room, the walls of which are lined
with oak panelling and glazed tiles.
To the interior of the Stock Exchange the public is not admitted, the
authorities and the members themselves, aided, of course, by the
janitors stationed at the doors, keeping most careful guard. Many are
the stories, generally exaggerated, as to what befalls the stranger who
has the temerity and skill to pass within the sacred portals.
Occasionally, however, distinguished visitors are shown round, and the
list includes the late King Edward VII. Only once have the Managers
given permission for drawings to be made of the interior for
publication, and on one occasion photographs of the interior were taken
and sold for charity.
One of the most common remarks of the clerk who sees it for the first
time is, "How small a place!" The impossibility of taking in the whole
of the building at a glance is responsible for the false impression so
often formed by the disappointed young man newly introduced to a scene
of which he has heard so much. But to take one's stand at the Bar of the
House, which is just inside the door at Capel Court, is to obtain a much
better view than that usually offered by the waiters on effecting the
introduction of a new-comer. One is then in the Consol Market, in some
respects the most important of all, and looks right down the whole
length of the House from west to east. The vista is fine, if not,
indeed, impressive. The massive pillars, so often criticised by the
members for the loss of space they involve at their huge bases, stand
out with a certain solid grandeur, but the dome of what is still called
the New House, the most beautiful feature of the Stock Exchange, is lost
by reason of the lower roof just in front of us. On the left hand or
north side of the Bar is the Parlour, and on the right stands the
Kitchen, names handed down through decades for the two little sets of
desks on each side of the Bar. Moving forward through the Consol Market,
and slightly to the left or north-east, one passes through the Colonial
Stock and Bond Market, and stands upon the threshold of the Grand Trunk
section. It will be understood that there are no lines or barriers to
form boundaries of the various markets. When one talks of a Stock
Exchange market, he has in his mind a mere space in the Stock Exchange
near some pillar or window; or, much more likely, he has in his mind the
group of men who occupy it, dealing, or prepared to deal, in certain
securities. Generally speaking, custom alone forms the barrier between
the various departments, and the consequence is that when one particular
market attracts many members by reason of its animation, the dealers in
the busy part frequently overflow the fancy boundaries and press hard
upon the neighbouring space. Thus it often happened that the American
Railroad Market, touching the Home Railway section on one side and the
Grand Trunk section on another, overlapped the boundaries of each, and
eventually, because of the inconvenience, the home of American Railroads
had to be enlarged.
Pursuing the oblique left-handed direction of our walk through the
House--proceeding, that is, to the north-east--we pass three
markets--Home Railways on the right, Trunks on the left, and next to
Trunks, further on, American Railroads. We struggle by Banks and come
into the cosmopolitan waters of the Foreign Market, where may be heard
half a dozen different languages all being spoken at the same time. The
Foreign Market is in shape like a sleeve, and the cuff end of it leads
out to the main door of the Stock Exchange in Throgmorton Street, so
that we have traversed, roughly speaking, the north-west quarter of the
Stock Exchange. Round that door the South African Market or Kaffir
Circus seethes and squirms. First comes the Rand Mines and East Rand
division, then the gold shares to the left and the De Beers market to
the right, leading into the middle of the Gold Fields and Chartered
group, beyond which again stand the dealers in Rhodesians, each group,
of course, covering a wide variety of kindred shares. But, getting back
to the main entrance and deviating with the structure of the House a
little to the right, we leave the Deep Level section sitting round a
pillar and press on through the British Columbian lot. This market runs
along the north-eastern side of the House, and is bounded on the outside
by the spacious telephone and lavatory accommodation. The British
Columbian Market abuts on the eastern end of the Stock Exchange--the
apex of the rough triangle which is its form.
We have thus traversed the Stock Exchange from end to end through its
northern half, and turning, we proceed to traverse the southern half.
First comes the West Australian Market, which is bounded on the outside
by the Cloak Room. This market has a fine space to itself, and rejoices
in the possession of the board upon which the tape of the Exchange
Telegraph Company is displayed. On the western confine of the West
Australian Market is the Jungle, the West African Market. In busy days
the West African dealers sadly crowd the Foreign Railway Market,
standing next, and the Jungle occasionally gets mixed up with the
Electric Lighting section. We are gradually working round to our
original standpoint, and leaving the little Mexican Railway and Uruguay
Markets on the right, we press through the Miscellaneous or Industrial
Market, on towards that devoted to Indian Railway securities, which in
its turn debouches upon the Kitchen, where we started.
Of course, there are many markets one hardly notices in a hurried tour
round the House, but we have glanced at the principal. We have also
noticed here and there the boards upon which quotations are marked and
record is made of the prices at which business is done. We have also
noticed the Waiters' Stands, about twenty in number, placed in various
parts of the House, pulpit-like, or rather rostrum-like, erections, each
with its small sounding-board above, so that the important announcements
which emanate from these stands may be well heard in the House. But we
shall learn more of the uses of these internal features of the Stock
Exchange, marking-boards, waiters' stands, and so on in subsequent
chapters.
Upon this market-place something approaching three quarters of a million
sterling has been spent. It does not belong to the members as such; it
is the property of the proprietors, who, roughly speaking, must be
members of the Stock Exchange. When at the beginning of the nineteenth
century it was decided by the members of the Stock Exchange of that day
to erect a new building, some of the more enterprising of them
subscribed £20,000, and they laid the foundation-stone of the present
edifice, which has been vastly extended since and is still growing. The
share capital is now £260,000 and the debenture capital £500,000. All
new members are now required to hold one or more shares, and only
members are allowed to hold the shares except in the case of these few
proprietors who acquired them before the end of the year 1875, when a
new deed of settlement came into force. These proprietors, their
executors and legatees, may hold the shares although they are not
members, but in other cases where the shares fall into the hands of
those who are not members, or where they are in the hands of one who
ceases to be a member, they must be transferred to a member within
twelve months. Anyone, whether a member or not, may hold the debentures,
which are secured by a floating charge on the whole property, although
they carry no mortgage rights.
The proprietors of the Stock Exchange draw a great part of their
revenue, of course, from the entrance fees and subscriptions of the
members, who pay a rent, as it were, for their stands in the
market-place; and a considerable portion of the revenue comes from the
rent of the brokers' offices which form part of the building. The
interests of the proprietors are controlled by directors, who are called
Trustees and Managers. Before they can be appointed they must have been
proprietors for the preceding five years, and must hold at least ten
shares at the time of their nomination. Their task, as may easily be
imagined, is no light one. They are nine in number, as they have been
ever since the present constitution came into force at the beginning of
last century. It is theirs to provide a fitting market-place for the
important transactions carried on by the members and their clerks, who
number about 7,500 in all. To provide accommodation for such a
population, with all the requirements of ventilation, heating, and
lighting, as well as facilities for work at high pressure, which modern
business demands, would tax the organising capabilities of any body of
men. The principal officers of the Stock Exchange responsible to the
Managers are their Secretary, the Architect and Surveyor, and the
General Superintendent. It is not surprising that grumbling criticism is
sometimes heard; the matter for surprise is that there is not more of
it, especially considering the rapidity of the growth of the number of
members, and the difficulties in the way of extending the size of the
market-place. These difficulties are constantly being overcome; offices
are absorbed into the main area, corridors are swept away, the utmost
ingenuity is exercised in the creation of space.
The enlargements and alterations and the provision of facilities for
expeditious dealing and of conveniences for the comfort of the members
naturally mean a large amount of expenditure; but, in spite of this, the
Managers have always succeeded in making the market-place pay its
proprietors, and pay them handsomely. On the four hundred shares of £50
each, which formed the original capital of the Stock Exchange when it
was opened in 1802, there were no dividends for the first three years,
but then a series of annual £10 dividends set in, with the result that
within seven or eight years from the outset the whole of the capital had
been returned in dividends. Until the end of 1853 the shares remained
£50 paid, and by that time no less than £571 had been paid on each share
in dividends. As there was a £25 call in 1853, the shares became £75
paid, and in 1854 a dividend of £13 was distributed. In the following
year there was no dividend--the fabric of the Stock Exchange had been
entirely rebuilt--but a call of £25, making the shares £100 paid. On
these £100 the dividends amounted in the years 1856 to 1867 inclusive to
£192. Then in 1869 there was again no dividend, but a call of £25, and
in the next seven years, from 1869 to 1875 inclusive, the dividends
amounted to £490 10_s._, and the calls to £155. Thus, at the end of
1875, when a reorganisation of capital took place, the shares had become
£280 paid, and on each of these had been distributed £1,266 10_s._ All
this is to show that the Stock Exchange was a huge financial success
from its inception--that the market-place has paid its proprietors. By a
further reorganisation of capital the shares had become £12 paid in
1882, and in that year the dividend was £3 18_s._ It went on increasing
steadily for many years after that: £5 being paid for 1888, £6 for 1893,
£7 10_s._ for 1896, £8 for 1899, £9 for 1900, £10 for 1904, and £12 for
1905. This £12 a share has so far been the maximum rate of dividend. In
May, 1911, a call of £1 a share was made, making the shares £13 paid,
and the most recent dividend was £10 10_s._ a share. The liability on
the shares is unlimited, but no more than £2 can be called up in any one
year. The market price of each £13 share has for some time been round
about £160, whilst the 3 per cent. debentures are quoted at about 83.