buy stock or shares on the day fixed at the agreed price, and is in the nature of a “bear" transaction; (2) a “call,” which confers the right to call upon the giver of the option to sell at the price fixed; and (3) a combination of the two called "put and call," which confers the right either to buy or sell at a definite price. A "put of more or "call of more means the right to sell or buy a stated amount of stock with the option of doubling that quantity if so desired. This is a favourite method of operating with persons who wish to limit their liability in speculating for the rise or fall. Option dealing is, however, somewhat complicated, and should only be indulged in by those who are in close touch with the market. The advantage offered is that, while the profit may be unlimited, the loss cannot exceed the option money paid. A person who has such a right need not necessarily wait until the period expires, but may close the transaction at any moment before that time. Options may be made from day to day, or for one, two, three, or more accounts, or for any specified date, and the option price varies according to the securities involved, and the time for which the option has to run. It should be remembered that, unlike "cover" (see next paragraph), the option money is never returned, as it is a premium paid to the dealer for taking the risk of the market going against him.

Cover System. The "cover" system is another favourite method of speculating in stocks and shares, and its advantages are loudly proclaimed by the touting outside brokers in their advertisements and circulars. Their business almost wholly consists of dealings of this nature. Members of the Stock Exchange, however, do not favour it. The system certainly offers to persons of small means the opportunity of operating in stocks and shares with a very limited outlay, thus putting speculation practically within the reach of all. It is a regrettable fact, however, that the temptation thus offered to the public in general opens the way for many abuses on the part of unscrupulous and dishonest dealers.

"Cover" is a deposit of so much per cent or per share given to a broker to limit a client's liability in some transaction. It also insures the broker against loss, because he has the right to close the transaction at once if the "cover" should "run off”—that is, becomes exhausted. As in the case of option dealing, the operator may close the bargain at any time during its currency, and may thus take advantage of any variation of the price in his favour, and reclaim the "cover as well. A broker, however, can. only close the transaction when the "cover" is exhausted by the price rising or falling by the amount of that "cover." The system will perhaps be more clearly understood if we take a concrete example of both a "bear" and bull" transaction. Suppose then that a "bear" of £1000 Great Western Railway stock desires to sell on a 1 per cent "cover," while the current price is say 140-1404, he would deposit £10 with the broker and sell £1000 of stock for £1400. If the price, instead of falling, should rise to 140-141 the "cover" would automatically "run off," and the transaction would be closed. If, on the other hand, the operator had "bulled" the stock while the price was 1423-143 he would deposit the £10 and buy the stock at £1430. If the price should rise to 144-1441 he would then realise £10 in addition to the £10 of "cover," which was merely a deposit with the broker to provide against any possible loss should the price move in an adverse direction. An operator may often save part of the "cover" before it is entirely exhausted by quickly closing the transaction; or he may increase his "cover" before the original deposit "runs off," but it is always safer to deposit an ample "cover at first. The outside broker

has many tricks by which he can appropriate the "cover." As a matter of fact he rarely buys or sells the stock or shares according to instructions, but depends upon the fluctuations of the market, or some ingenious excuse to provide an opportunity of pocketing the whole or part of the money entrusted to him. As already stated, some of these outsiders do an honest business, but as a general rule they cannot be trusted, and in any case it is always preferable to deal though a member of the "House."

STOCK EXCHANGE LISTS AND QUOTATIONS

The Daily List.-The London Stock Exchange Daily Official List is an imposing document of sixteen closely printed pages, and contains the names of about 4000 securities, classified under various heads. It supplies a daily record of the prices of stocks and shares, and is compiled by the committee, which is responsible for its accuracy. Two editions are issued in the course of the day, one at 1 o'clock and the other at 3 o'clock. As already explained, two prices are usually quoted for each security, the lower being the price at which a jobber or dealer will buy, and the higher the price at which he will sell. These two prices may be close or wide. For example, 121- would be considered a "close" price, and 12-13 or 120-125 a "wide" price. As a rule, the price is close when dealings are numerous, because in that case a jobber in competing for business can afford to accept a small "turn" in view of the number of bargains he may make. When there is not a "free market" in the security the price is usually "wide." Occasionally one price only is mentioned in the money article of a newspaper. That is always the "middle price "-i.e. the price midway between the lower and higher prices. The last column of the official list, headed "Business done," is somewhat misleading. It usually presents a very blank and lifeless appearance. As a matter of fact, only a very small portion of the actual business done is there recorded. There is no obligation on brokers or jobbers to "mark" or record their transactions, and they are usually either too busy or indifferent to take the trouble, unless they have some special reason for publishing the information.

Ex dividend, ex rights, ex new and ex all.-One or other of these expressions in an abbreviated form (as "xd.") will sometimes be observed against a quotation. "Xd." means that the price does not include the dividend due or just paid. The seller will always receive the dividends until a new holder's name is registered at the office of the company. If the security is not marked "xd." it is then "cum div." (with the dividend), and the seller will in that case hand over the dividend to the purchaser when it is received. "Rights" usually refer to the right to subscribe for shares in another company-a privilege which may enhance the value of the security. "New" may refer to the right to subscribe for new shares in the same company, and "all" refers to the case where the seller retains both rights.

Application for "quotation.”—The prices of the shares of a new company are not quoted as a matter of course in the Official List. Before this privilege can be secured, the company must comply with certain requirements similar to those which are demanded before a special settlement is granted, the object of the Stock Exchange Committee being not to facilitate the sale of such shares by those interested but to safeguard the interests of the public. The appearance of a company's shares in the Official List undoubtedly confers a certain status on those securities in spite of the declaration of the committee that the granting of a quotation

does not in any way imply that the security is superior to any that are not quoted. There is always a better market for shares thus quoted, and it is usually easier to borrow money upon them at the bank. One of the requirements exacted by the committee is that the prospectus must have been publicly advertised. In spite of this requirement, however, some companies are floated without issuing any prospectus, and the strict provisions of the Companies Acts are thus avoided. The directors usually issue a statement, which they describe as "for public information only," and not a prospectus. Such a statement is naturally confined to what is favourable to the company, and care is taken that those who enquire for shares shall have no difficulty in obtaining them. The process of " making a market" in such shares is effected by the promoter, who arranges with a jobber to sell the shares at anything over a certain price. He then instructs certain brokers to buy some of the shares and others to sell, thus creating a fictitious activity in the shares. The process may cost some money, but if the public are induced to come in the money so expended is soon recouped.

The

"Street" Prices.-After the Stock Exchange closes, business is frequently carried on for a time in the street outside. In the event of a "boom" being on, such street operations may continue for several hours. street" prices are regularly collected on behalf of the leading financial newspapers, and appear next morning in their columns. This is the only record available to the public.

The "Tape."-The Exchange Telegraph Company has the privilege of collecting the prices in the Stock Exchange throughout the day, and these are communicated to brokers, newspaper offices, clubs, etc., by means of an electric instrument, called a "tape machine," which automatically prints the prices all day long on a paper "tape" which passes through it. The only persons who are debarred from subscribing for such a machine are the outside brokers. The committee have made this one of the conditions on which the Exchange Telegraph Company is permitted to collect and issue the current prices. These "tape prices," with the time of day to which they apply, are daily printed in full in the Financial News and two or three other newspapers.

Other Publications.-The Stock Exchange Weekly Official Intelligence is also issued by the committee, and specifies the same securities as are quoted in the Daily List, but instead of giving the current prices it prints the highest and lowest prices touched during the week as well as since the beginning of the year. It also contains lists of securities removed from the Daily List, and official information of various kinds as to settling days, special settlements, etc. The annual Stock Exchange Official Intelligence is a ponderous volume of over 2000 pages, giving detailed information as to every security of importance, including the history of each concern, the names of the officials, and many other particulars. The greater part of the same information is contained in a more handy and cheaper form in the Stock Exchange Year Book and the Mining Manual, the former of which is compiled and issued by Mr. Thomas Skinner, and the latter by Mr. Walter R. Skinner. These two volumes contain all the information which the ordinary investor is likely to require.

STOCK EXCHANGE TERMS

Account. The period (usually a fortnight) between one settlement and another. Account Days.-At the end of each account, three days are set aside for the adjust

ment of all Stock Exchange bargains. The first day of the settlement is called "Contango Day" or "Making-up Day"; the second, "The Ticket Day" or "Name Day"; and the third, "The Settling Day" or "Pay Day." (See pp. 136-137.) Accumulative. When there is a sinking fund for the purpose of redeeming Bonds or Stocks, the interest which in the ordinary way would be paid on Bonds redeemed in the course of the year is sometimes added to the fund. Ad Valorem Duty.-A stamp tax according to the value of securities.

Ailsa.-The Deferred Ordinary Stock of the Glasgow and South-Western Railway. Ales or Slops.-Allsopp's Ordinary Shares.

Anglos.-Anglo-American Telegraph Company's Shares.

Apes-New York, Pennsylvania and Ohio Railroad First Mortgage Bonds.
Arbitrage.-See Vol. I. p. 126.

Averaging.-The means by which a speculator increases his transactions at a higher or lower figure when prices move against him, so that the average price of the whole will be higher or lower than his original purchase or sale. Ayrshire.-The Glasgow and South-Western Railway Ordinary Stock. Backwardation.-See Vol. I. p. 202.

Bags.-The Buenos Ayres Great Southern Railway Ordinary Stock.
Bays.-Hudson Bay Company's Shares.

Bear.-See Vol. I.

p. 368.

Berthas.-The Deferred Ordinary Stock of the London, Brighton and South Coast Railway.

Berwicks.-The Consolidated Ordinary Stock of the North-Eastern Railway. Bonds.-Securities issued by Governments, railways, and other companies in return for money borrowed by them.

Bourse.-A Continental Stock Exchange.

Brighton "A."-London, Brighton and South Coast Railway Deferred Ordinary Stock.

British.-The North British Railway Ordinary Stock.

Brokerage. The commission charged by brokers for transacting business for their clients.

Brums.-The Ordinary Stock of the London and North-Western Railway.

Bucket Shop.-See Vol. I.

Bull.-See Vol. I. p. 531.

p. 514.

Buying In.-See Vol. I. p. 531.

Caleys.-The Ordinary Stock of Caledonian Railway.

Call-See Vol. II. p. 14, and "Options," Vol. V. p. 226.

Can. Pacs.-Canadian Pacific Railway Shares.

Carrying Over-See Vol. II. p. 18.

Centrals.-New York Central Railway Company's Shares.

Chats.-The Ordinary Stock of the London, Chatham, and Dover Railway.
Claras.-Caledonian Railway No. 1 Deferred Ordinary Stock.

Clarettes.-Caledonian Railway No. 2 Deferred Ordinary Stock.

Contango.-See Vol. II. p. 242.

Continuation Rates.-See "Contango" and "Backwardation."

66

Coras.-The Deferred Divided Ordinary Stock of the Caledonian Railway. Cornering.-The sellers or Bears" of securities are "cornered" when they can only obtain them from the persons to whom they have sold. This scarcity of Stock is brought about by a heavy "over sold" account, and as a consequence the "Bears" are compelled to buy at higher prices.

Cover.-See Vol. II. p. 300.

Cum Dividend.-When Stocks or Shares are sold "Cum Div." the purchaser is entitled to the dividend declared or about to be declared.

Dealer.-One who deals on his own account and gets his profit from the “Turn of the Market." A jobber.

Debenture.-See Vol. II. p. 326.

Defaulter.-See Vol. II. p. 354.

Districts.-The Ordinary Stock of the Metropolitan District Railway.

Doras or Dover "A."-The Deferred Ordinary Stock of the South-Eastern Railway. Dovers.-The Ordinary Stock of the South-Eastern Railway.

Easterns.-The Ordinary Stock of the Great Eastern Railway.

Eries.-The Common Stock of the Erie Railroad Company.

Ex All.-Without dividend, bonus, or any right to new Shares which may be issued.

Ex Div.-Without dividend declared.

Floras.-The Preferred Ordinary Stock of the Caledonian Railway.

Founders' Shares.-See Vol. III. p. 112.

Goschens.-The Two and Three-quarters per Cent Consols (now reduced to 2 per cent).

Haddocks.-The Ordinary Stock of the Great North of Scotland Railway.
Hammered.-See Vol. III. p. 233.

Inscribed Stocks.-See Vol. III. p. 345.

Leeds.-Lancashire and Yorkshire Railway Ordinary Stock.

Making-up Price. See Vol. IV. p. 506.

Margin. See Vol. V. p. 5.

Megs.-Mexican Railway, First Preference Stocks.

Mets.-The Ordinary Stock of the Metropolitan Railway.

Mids.-The Ordinary Stock of the Midland Railway.

Milks.-Chicago, Milwaukee, and St. Paul Railroad Shares.

Noras.-Great Northern Railway Deferred Consolidated "A" Stock.

Obs. Obligations on Bonds of foreign railway companies.

Options.-See Vol. V. p. 226.

Official List.-The list of prices and dealings in Stocks and Shares published daily by the authority of the Stock Exchange Committee.

Penns.-Pennsylvania Railroad Shares.

Ports.-Portuguese Loan Bonds.

Potts.-The Ordinary Stock of the North Staffordshire Railway.
Put.-See "Options," Vol. V. p. 226.

Readings.-Philadelphia and Reading Railroad Shares.

Rig. "Rigging the Market" means the forcing up of the price of any Stock far beyond its real value. A scarcity of the Stock is produced by secret and combined operations, and the "Riggers" take the opportunity of selling at a forced profit.

Rollers.-United States Rolling Stock.

Rosies.-Buenos Ayres and Rosario Railway Ordinary Stock.

Scrip.-A provisional certificate for the payment of calls or a Government loan, or shares in a public company.

Settlement. The fortnightly Account fixed by the Stock Exchange Committee for the settlement of all bargains.

Souths.-The Stock of the London and South-Western Railway.

Special Settlement.-A special date fixed by the Stock Exchange Committee for the settlement of Stock and Shares of new issues.

Stag.-One who applies for new Shares with the sole object of selling directly a premium is obtainable and making an immediate profit.

Talon. A certificate attached to certain Bonds which can be exchanged for an additional set of coupons.

Trunks.-The Stock of the Grand Trunk Railway of Canada.

Turn of the Market.-Expresses the difference between the buying and selling prices, which is really the jobber's profit.

Unions.-Union Pacific Railroad Shares.

Vestas.-The Deferred Stock of the Railway Investment Company.
Westerns.-The Ordinary Stock of the Great Western Railway.

York A.-The Deferred Ordinary Stock of the Great Northern Railway.
Yorks. The Ordinary Stock of the Great Northern Railway.

W. GORDON CAMPBELL.

Stockbrokers' Book-keeping and Accounts. -Before describing this system of books for stockbrokers the following remarks regarding the methods of business are necessary:

"Accounts."-In the stockbroking business nearly all transactions are completed at the settlements which take place twice monthly. Each settlement occupies four days, which are known respectively as follows:-The first two, as carry-over or contango days (the first being for mining shares, and the second for general securities); the third as ticket or name day, and the fourth as settling or pay day. The period between settlements is known as an "account." Over and above these fixed fortnightly settlements there are special settlements, fixed by the committee as required, for new securities, also separate settlements for Consols (once a month).