be found in a particular place. Each group constitutes a market in a special class of securities-British government stocks, foreign government bonds, American railroad stocks, South African mining shares, etc.-so that any broker who receives an order to buy or sell any security dealt in in London can walk straight to a certain place in the stock exchange, knowing that he will there find a knot of jobbers prepared to buy or sell it, at a price, and to name the prices at which they will buy or sell before they know which they are to be asked to do. Hence it follows that when asked to name a dealing quotation, they always give a double price, meaning that they will buy at the lower or sell at the higher, trusting to cover the bargain at a profit by means of the margin in their favor which the double price gives them.

The extent of this margin varies according to the freedom of the market in the security that is dealt in. In the case of securities of average marketability in London, such as British and American railway stocks and foreign government bonds, the margin usually quoted is one-fourth of 1 per cent. Thus the quotation for London and Northwestern Railway stock would be 131, 1311⁄2; for Erie shares, 38 to 384; for Russian fives, 99%, 9934. But in actual dealing, as will be shown later, a skillful broker will probably impel his jobber to come a little closer—that is, to name a rather narrower margin, three-sixteenths or even one-eighth of 1 per cent. In the case of a stock like British consols, the market in which is especially free, the usual quotation gives a margin of one-eighth of 1 per cent-843% to 841⁄2; and when it is a question of mining and industrial shares of small denomination, which are quoted

on the basis of so much per share and not in hundreds of stock, the margin is often reduced to 3d, or even less. For instance, the share of the British South Africa Company will be quoted at 29s. to 29s. 3d., because it is evident that a small margin enables the dealer to make a big profit when it applies to each share in every hundred turned over.

The profit made by the jobber or jobbers by means of this margin is called his "turn," and it obviously averages half the margin. If a jobber knows that a stock is changing hands in the market at 99%, he will make his price to a broker who comes to him 993%, 995%, and having bought at 99% or sold at 995% expects to even himself at 99%. In the case of a mining share his turn may thus only amount to 11⁄2d.; but in the first case he makes a turn of one-eighth of 1 per cent on each £100 stock; in the second he makes 11⁄2d. on each share. Thus if he deals in £1,000 stock he earns ten-eighths of 1 per cent, £1, 5s. od.; if in 200 mining shares his turn will be 300d., £1 5s. od. again. In the case of securities seldom dealt in, and in which the market is consequently not free, the margin between the buying and selling quotation will be 1 per cent or more, because the chance of the jobber's being able to cover himself quickly and at a profit is obviously lessened by the comparative rarity of sellers and buyers. And sometimes when the market in securities is especially narrow, jobbers do not attempt to "make prices"—that is, to name two quotations at which they are prepared to deal outright— but negotiate the purchase or sale for the broker (who then has to disclose the nature of his business), and charge a "turn" for their trouble and special knowledge. Illustrating this peculiarity of London Stock Exchange

business by a concrete example, we may imagine that a broker receives an order from a client to buy 100 shares in the Union Pacific Railroad. He goes to that part of the "house," as the stock exchange calls itself, in which a seething mass of shouting jobbers is gathered who constitute the American market. He is promptly accosted by one of the jobbers and asked if he has anything to do, and replies that he wants to deal in a few Unions. The jobber, knowing that the current price of Unions is 1984, intimates that he will buy at 198% and sell at 1983%; this he does by merely naming the two fractions "an eighth, three-eights," since the figure is supposed to be already known to the broker. The latter by merely looking expectant, or by showing an inclination to move on to another jobber, or by asking his jobber to "come closer,' generally induces the latter to quote a narrower margin. "Three-sixteenths, three-eighths," says the jobber, guessing him to be probably a buyer. The broker shakes his head and goes on to another jobber, and finally either succeeds in getting his shares at 198, or at least satisfies himself that 1983% is the best that he can do for his client.

The broker is thus protected by the fact that the jobber does not know, when naming his price, whether he will be made to buy or sell the shares, for, having made the price, he is bound to accept the bargain whichever way the broker may declare himself; and, as has been shown, the broker, unless he definitely asks for a price to be made on a certain basis, can always go from one jobber to another trying to get a price made which suits his client's business. Competition between one jobber and another enables the

broker to deal on the narrowest possible margin, and tends continually to reduce the "turns" which the jobbers earn.

It must be noted that when a jobber makes a price without the number of shares or amount of stock being stated, he is bound to deal, in even sums, up to the amount of either £1,000 stock or bonds, or the equivalent in foreign currency; 100 shares of a market value of £1 or under; 50 shares of a market value of £1 to £15; 10 shares of a market value of over £15; or 100 American shares of $100.

If, when the jobber has named his original price, the broker asks him to "come closer," the former is at once released from his obligation to deal at the price originally named. The capacity of jobbers to deal readily and freely, and at close prices, is obviously increased when they are not always anxious to keep their accounts even, and cover every bargain, but are prepared to "run a book" as it is called, taking stock when it is offered freely and being ready to carry it for a time, or if the market is the other way, facing the position of being "short." Their power thus to act as merchants rather than mere dealers has been lessened by the great increase that has taken place in recent years in their number; since the consequent diminution in the volume of business done by each, and the narrowing of turns, has made them less able to take the greater risk involved by running a book. Those who still do so, however, have the advantage of getting more custom from the brokers, and they are thus better able to tell what the outside public is doing in the stocks in which they specialize.

When acting as a pure dealer, the jobber is always liable to the risk that the market may have gone against him before he can undo his bargain. If a number of brokers

are buying or selling simultaneously this may easily happen, and the jobber requires a very active and alert intelligence in order to keep closely in touch with the true state of the market. He is not bound to make a price if he is asked to do so, and sometimes when the market is altogether demoralized it happens that jobbers refuse to deal on the system described above. This is quite a rare occurrence, however, and as a rule it is expected of them that they should be prepared to provide a market and take the risks of their position. The jobber's business is on the whole a profitable one, and when the market is active and free he makes profits rapidly, the volume of his turnover fully compensating him for the narrowness of the margin on which he works. His office expenses are small when compared with those of the broker, who has to conduct correspondence with clients, and from the nature of his business he has less reason to fear bad debts; for the jobber, as such, deals only with other members of the stock exchange, brokers or other jobbers, and they have to meet their debts on settling day, or declare themselves defaulters. But the broker deals for outside clients, and if they are unable to meet their speculative losses the broker has to pay and take his chance of recovering the debt by means of legal proceedings.

The justification of the jobber lies in the ease and freedom which his existence imparts to business in London. London's business is so diverse, and the number of different securities there dealt in is so great, that if every broker who received an order had to look for another who wanted to buy what he wanted to sell or vice versa, the work which is now done could never be got through. The English public,