remote date may be asked to join a reconstruction, and put up more money under the penalty of having his interest extinguished if he should refuse. A further grievance to the public is the granting of special settlements to Companies, which even a superficial inquiry would convince the Committee were sought for the consummation of swindling dealings of which the unwary speculator had been made the victim. The Le Roi No. 2 may be instanced, the settlement of which was obtained upon a false representation by the secretary of the company. In this case the members of the House were deeply injured as well as speculators outside.

The settlement in the Rossland and Kootenay companies inflicted incalculable injury upon the thousands of the British America shareholders as well as on members of the Stock Exchange, several of whom were hammered in consequence. There is only too much reason to believe that the settlement was granted and the making-up price fixed in violation of the rule which applies, and without full consideration of all the circumstances of the case. To suppose otherwise would seriously reflect upon those who were responsible for this huge blunder.

The dissemination of false information within the House with the view of affecting markets, and the suppression of information concerning traffic returns, &c., till those in possession of the figures have completed their operations may be difficult points to deal with, but they have been very fruitful in engendering that mistrust which has helped to diminish the business of the Stock Exchange. Another matter that calls for the earnest attention of a Committee bent on reform is the facility with which the rules of the Stock Exchange lend themselves to the designs of outsiders acting in collusion with members, such, for example, as the buying-in rule, which recently permitted the carrying out of the Anglo-Dutch conspiracy. I believe it has been held by judges in the High Court that the suspension of the buying-in rule is not in accordance with Common Law, under which the Stock Exchange Committee have no power to alter the terms of contracts with individuals outside their own corporate body. Be that as it may, the differences that exist between the common law and Stock Exchange law have ever been fruitful of cases for the decision of the High Court and the Appeal Court, and such nice points arise in consequence of this divergence that the most experienced counsel are frequently puzzled, and judges have corresponding difficulty in arriving at an absolutely just decision. The only plea the Stock Exchange can urge for abstaining to bring its rules into harmony with Common Law, is

that it would be impossible to carry on its business under the changed conditions. I refer particularly to the circumstance that each member of the Stock Exchange stands in the relation of a principal to every other member. This makes brokers liable for debts contracted by their clients. Outside the Stock Exchange brokers would be merely agents having no liability. The point is highly important, and must be considered in any scheme for reform of the Stock Exchange. If the Committee were to insist that change is impossible, I should say it would be a fatal contention, for we cannot be governed by two sets of laws, and in cases of conflict the Common Law must prevail.

Stock Exchange reform to be effective must be radical, and any open discussion on the subject must presently reach the point as to whether it can always be tolerated that the laws which govern that body can continue to remain at variance with the laws as they stand on the Statute Book. I have indicated in what respect they differ, and why that difference is tacitly accepted by the members, notwithstanding it sometimes results in their own ruin. I could not in a few words explain how Stock Exchange law and Common Law could be brought into harmony. I may say, however, that it would involve the remodelling of many rules, and change the base of the system upon which Stock Exchange dealings are carried on.

Perhaps the House is hardly prepared for this at present, and certainly the Committee would stand aghast at such a suggestion, but sooner or later it will have to be faced. The matter deeply concerns both the Stock Exchange and the public, and there is absolutely nothing of greater importance; but leaving it for a moment, I will treat of some others more easily dealt with.

A few words as to the constitution of the Stock Exchange will help to a better understanding of the problems under consideration. It is a joint-stock institution, carrying on its business at a profit and paying good dividends. The shares cannot be held except by members or their legatees. There is a board of management, whose main object is to make the Stock Exchange a paying concern. The fabric is vested in them, and the revenue is received and administered by them; to all intents and purposes they are the paramount body. To prove this statement it is only necessary to say they could close the building and sell the freehold if the shareholders so willed. They could reduce the members' subscriptions to nil, or raise them to any sum they chose.

There is another body, the Committee for general purposes, consisting of thirty members, elected annually, who deal with the internal affairs of the House, and investigate and adjudicate

upon disputes between members, and consider complaints made by outsiders. They have the power to make, abrogate and modify rules according to a deed of settlement, and their decisions as between members are final unless they choose to permit the disputants to fight their battles in the law courts.

The interpretation of the rules rests with the Committee, their deliberations are conducted in secrecy, and they give no reasons for their decisions.

They deal with matters involving millions of money, and their powers, within certain limits, are greater than those of judges of the High Courts of Justice. They are men of integrity, elected rather on account of their popularity with their brother members than from any special aptitude for the duties they have to perform.

The two bodies-the Managers and the Committee-do not, as some suppose, constitute a dual control, each works within its own sphere, although not altogether with a common objectthat of the management being to increase the earning capacity of the institution to the utmost for the shareholders, whilst the Committee are representative of the interest of the general body of members. It is contended, and I think with good reason, that one of the chief causes of the impoverishment of the House is to be found in the large numbers of superfluous members. In bad times, such as we have had for the past three years, the House may be compared to a mine with a hundred-stamp capacity but only enough ore to keep twenty going. The rest are grinding the air. I think he would be a very sanguine man who could predict an early return of prosperity to the House or imagine such palmy days as would enable the 4800 members to get out of it such a good living as was made by their forebears. The causes of the depression are too deep-seated to pass away of themselves. Want of confidence on the part of the speculative public is at the bottom of it, and this must be won back before we can look for better times. The limitation of the number of members might not be acceptable to the Managers, but a Committee desirous of putting its house in order should, if they dare, insist upon it and admit new members only as vacancies Occur. It would be well also to investigate the financial position or resources of present members and decline to re-elect those whose standing did not warrant it. In this way the number of members could be reduced to an agreed minimum, each constituent part of which would command confidence and go very far towards raising the tone of the House. The shareholders, however, would not allow the Managers to accept such a scheme as it would greatly reduce their income. To meet this, members

might be allowed to put up their seats for sale, a condition being that a substantial part of the sum realised should go to the management. I do not see how it would be possible in any other way to reconcile that clashing of interests which is complained of in what is called the "dual" control.

Perhaps in no department of the Stock Exchange is reform more urgently needed than in the appointment and constitution of the Committee. It is so large as to be unwieldy, and its number should be very materially reduced. A committee of ten would be far more convenient than that of thirty. It must be obvious that in matters of general interest, which all might desire to take some part in discussing, if each member spoke for five minutes only it would take two and a half hours to arrive at a conclusion; moreover, an unanimous vote on any subject must be a rare occurrence, and the evil of divided counsels only to be avoided by the blind acquiescence of the minority. I believe under the present system special subcommittees are appointed to deal with particular matters, but this is open to the objection that those so appointed as being conversant with the point at issue are generally interested either directly or indirectly, and with no wish to impugn the judicial impartiality of such sub-committee I yet think it would be better to let disputes be settled by those who, like Cæsar's wife, are above suspicion.

In this connection I think members of the Committee should not be shareholders in the company. I have already pointed out that the interests of the general body of members and those of the shareholders may sometimes be at variance. In reconstituting the committee I would suggest that all should be paid, and not only the deputy-chairman, and that no one of them should be engaged in active business. Their deliberations should be assisted by solicitors of high standing and knowledge of Stock Exchange matters, who should be present at each meeting, and there should be a right of appeal from the decisions of the committee, such appeal to be heard in public in so far as the interested parties were concerned, who might, if they so pleased, be represented by counsel.

It is undeniable that the business of the Stock Exchange suffers greatly from the inroads of the outside dealer, and it is a moot point whether the Stock Exchange should meet this by declaring war upon its competitors. Under present rules members are not allowed to advertise or approach other people's clients by circular. In this way they are handicapped, but for their own good, for if advertising were permitted they would all do it, and extra commissions won in this way would

hardly recoup the greatly increased expenditure. Another argument against it is that the small men who could not afford to advertise extensively would be embittered against the wealthy firms who spent large sums in this direction. They would fight for one another's clients, and endless strife would result. The Stock Exchange, as a large and wealthy corporation with a good record, has no reason to fear disjointed outside competition; the real danger is lest the public should be confirmed by experience in the belief that they can do better outside than in. It rests with the members themselves to make it patent by their methods that this is not so. No direct interference by the Committee is possible without making matters worse and running the risk of alienating business from the House.

Similarly the question as to whether brokers should be allowed to deal outside the House without employing a jobber is one that must be left to work itself out. The broker's clear duty is to do the best for his client, and if he can buy or sell to better advantage by dealing direct with outsiders he would be to blame if he sacrificed his client's interest to give the jobber a turn. It is hard on the jobber, no doubt, but he has to yield to the exigencies of the times. The Committee could not legislate on his behalf without interfering with that business principle which enjoins us to buy in the cheapest market. It has been suggested by a writer on Stock Exchange reform that brokers. might be allowed to have their offices elsewhere than in the precincts of the Stock Exchange; by all means if it would help them, but I do not think it would. The telephone at present has many imperfections, and at its best can only be regarded as a makeshift for an interview. The broker cannot possibly keep in proper touch with the market without paying it frequent visits, and dealings to be perfectly satisfactory should be personally conducted. It would add to the difficulties of the settlement if clerks had to go long distances to collect cheques and compare accounts.

One matter I have not referred to, and that is the question of commissions. It has been urged that there should be one uniform scale, and that members should be expected to abide by it. I agree with the principle, but it would fail in its application. It would simply be playing into the hands of the outsiders, who would at once cut under the list by advertising a lower scale.

In conclusion, I think it must be admitted that the serious condition of business on the Stock Exchange is not sufficiently accounted for by the bad trade and scarcity of money prevailing throughout the realm during the past three years, but is due in part to the changed conditions of business, and

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