THE MEMBERS AND THEIR CLERKS
So much for the proprietary of the Stock Exchange. Let us turn to the
members, those who actually deal in the market. Their number is now
about 5,000, and they are assisted by some 2,500 clerks, who also have
the privilege of entering the Stock Exchange. In spite of appearances,
no member of the Stock Exchange is a foreigner. Unless born a Briton, he
must have resided in this country for at least seven years, and must
have been naturalised for at least two years. For some years a rule was
in force that before a candidate could be elected a member, he must
serve at least two years' apprenticeship as a clerk in the House. This
was one means by which it was attempted to limit the number of members
at a time when the Managers were at their wits' end to find
accommodation. The existing members, of course, welcomed the
restriction, as it meant a limitation of competition; and, on the other
hand, this limitation can hardly be said to have been a hardship for the
public, for the number of members was by no means small, and certainly
no one who desired to enter into a Stock Exchange transaction could ever
fear that he would fail to find a broker. Moreover, the restriction was
very desirable, inasmuch as it kept out of the Stock Exchange those
adventurers who, possessing some money, or next to none, sought
membership to provide facilities for gambling, just as they might seek
membership of a baccarat club. Further, the business of a member of the
Stock Exchange is one full of intricacy, of technicality, and of
responsibility; and to enter upon it without some preliminary training,
such as the couple of years' apprenticeship as a clerk affords, is to
court disaster both for the adventurer and for those who may be involved
in his transactions.
The apprenticeship qualification has now, however, been abolished as a
necessary preliminary to membership, although four years' clerkship
(with a minimum of three years in the House itself) enables a certain
limited number of clerks each year to obtain membership on special
terms, the number so admissible being fixed each year by the Committee.
All other candidates have to comply with another formality designed to
restrict the number of members, each of them having to obtain the
nomination of a member retiring in his favour or of the legal
representatives of a deceased member. Moreover, each clerk admitted a
member on the special terms has now to buy one Stock Exchange share, and
every other candidate has to buy three shares.
It goes without saying that in the admission of members account is taken
of any previous business career that they may have had. No one is
eligible for admission who has been more than once bankrupt or
insolvent, and if he has once been proved insolvent, or has entered into
any composition with his creditors, he must before admission have paid
them in full and have obtained a complete discharge.
Then every applicant for membership, before his application can be
considered, must be recommended by three guarantors, reduced to two in
the case of candidates who have served as clerks in the House or
Settling Room for four years, of which at least three must have been in
the House. These guarantors must have themselves been members for not
less than four years, and must engage to stand surety for their nominee
in the amount of five hundred pounds each for a period of four years.
They must have personal knowledge of the applicant whom they recommend,
and of his past and present circumstances; and should he fail within the
four years, they each hand the five hundred pounds over for the benefit
of his creditors. No member is allowed to be surety for more than two
new members, and, of course, any indemnification of the guarantors by
the applicant for membership is out of the question. The guarantors have
to state that they are not indemnified and that they do not expect to
be. Should a guarantor receive indemnification subsequently, and the new
member fail, the guarantor is compelled to hand over to the creditors
the sum so received, as well as the amount of the surety. Every means is
taken in this and other ways to make sure of the guarantors being
independent of the new applicant.
Not only has the candidate for membership to find these sureties for the
protection of his creditors, and as a guarantee of his status, but he
has, of course, to pay an entrance fee and an annual subscription, all
of which money is collected by the Managers for the benefit of the
proprietors. The amount of these entrance fees and subscriptions is
varied from time to time by the Managers; needless to say, the variation
has always been in the nature of an increase. At present the entrance
fee for a member is five hundred guineas, and the annual subscription is
forty guineas.
As a matter of fact, every member is a new applicant for membership
every year, although, of course, he finds sureties and pays an entrance
fee only at the commencement of his Stock Exchange career. A little
before the 25th of March, on which day the Stock Exchange year
commences, he has to send in an application form for membership, on much
the same lines as that which has to be signed by applicants for first
admission. In the form of application with which he is provided, the new
applicant has to declare that he seeks membership in accordance with the
terms of the rules and regulations, and that he will be subject to them
in all respects; he has to give his private and office address, and the
names of his bankers, and he has to declare that he is not engaged in
any business, except that connected with the Stock Exchange, and that he
is in no way connected with any other institution in which dealings in
stocks and shares are carried on. At times there has been protest
against the stipulation that a member of the Stock Exchange shall not be
connected with any other institution of the kind. There have been
several movements for the formation of exchanges for mining share
business, and even for the establishment of rival stock exchanges, and a
year ago one of the great London newspapers established a system of
direct dealing between its readers for nominal fees.
In the form of application for either admission or readmission, there
must be stated the names of those whom the member proposes to employ as
clerks, of which he is allowed a limited number. Of course, the clerks
to whom reference is made are not mere office clerks in the ordinary
acceptance of the term. Of these a member may naturally employ as many
as he likes. But the Stock Exchange recognises a special grade of clerk,
who is granted admission to the House, and provides a rather important
element in its constitution. Each individual member may have five of
these clerks, who are divided into three classes. He is permitted to
have one who is called an authorised clerk, because he is authorised to
transact business for his employer just in the same way as the employer
himself would transact it. The authorised clerk pays an entrance fee of
fifty guineas, and an annual subscription of thirty guineas. The member
is permitted further to have two more, who are called unauthorised
clerks, because they have no authority to deal, although they have the
run of the House to convey messages and perform other similar services.
These pay an entrance fee of ten guineas, and an annual subscription of
the same amount. He is also permitted to have two Settling Room clerks,
who, unlike the authorised and unauthorised clerks, have not the full
run of the House, but only of the Settling Room, which they use in
performing the routine work of checking bargains and carrying through
the arrangements in connection with the settlement of transactions. They
pay an annual subscription of eight guineas. It is permissible,
therefore, for each individual member to have five clerks, and a firm
consisting of more than one member is permitted to have nine--two
authorised, three unauthorised, and four Settling Room clerks.
The limitation of clerks is another modern innovation in Stock Exchange
history. Before March, 1902, the limitation was not nearly so strict,
and the grade of clerk who is confined to the Settling Room, and had not
the run of the whole House, was unknown. The innovation furnishes more
evidence of the space difficulty with which the authorities of the Stock
Exchange have to contend, and ocular evidence of the same difficulty is
to be had by strangers in the vicinity of the Stock Exchange in the
large number of young men wearing the blue badge, which denotes an
unauthorised clerkship of the Stock Exchange, and the red badge, which
denotes the Settling Room clerkship. The badge is imposed as a means of
identification in connection with many complaints that arose as to
clerks loitering about the already congested markets. They are badged
and forbidden to loiter.
It is as one of these clerks that a candidate for membership can qualify
for admission on the special terms we have indicated. If the applicant
has served as a clerk for four years, with a minimum service in the
House of three years, his entrance fee is 250 guineas instead of 500
guineas, his application requires the backing of only two guarantors
instead of three, whilst the amount of each guarantee is only £300
instead of £500. As the total number of clerks employed is some 2,500,
and as there are twice as many members, it is obvious that whilst some
members and firms desire more assistance within the House, many do not
exercise the privilege of employing any clerks at all.