1. Securities, as we have said, are quoted at a higher price on cash; when the 3 0/0 is 66 on a cash basis and 66 40 at the end of the month, we say that the carry of the annuity at the end of the month is 40 cent. - In this sense, carry is the opposite of discount. When the bearers arrive at liquidation without having provided the values they have to deliver, they are obliged to buy at any price, for fear of execution; it then happens that the cash becomes more expensive than the forward sale. The annuity remains at 66 40 at the end of the month, so if the cash price is 66 70, the discount is 30 cent.

2. The carry is a loan on the deposit of securities; the one who lends is the reporteur, the one who borrows, the reporté. The loan on pledges has been provided for by the Code and is subject to certain formalities of deed and registration; it must be made at the legal rate, under penalty of repression as usury. What did the Stock Exchange imagine? A market fiction, of which the author of the Provinciales would rightly claim the original idea in favour of the RR. PP. Escobar and Lessius, inventors of the Mohatra.

“The Mohatra contract, say these skilled casuists, is one by which one buys fabrics dearly and on credit in order to resell them, at the same moment and to the same person, for cash and at a good price. - Mohatra is when a man who has a business of 20 pistols buys stars from a merchant for 30 pistols payable in a year, and sells them back at the same instant for 20 pistols cash."

Conversely, the carry is a contract through which a capitalist buys securities in cash and at a low price, to resell them, at the same time and to the same person,at a high price and on credit. - The Carryover is when a man who needs 37,500 fr. sells 25 Orléans shares for 1,500 fr. in cash, which he immediately repurchases at 1,510 fr. for the next liquidation.

In the Mohatra, the owner of the securities is, as we can see, no more than a disguised lender; in the carry-over, he is a borrower. That is the difference. The good fathers aimed to calm the consciences of the devout usurers; the financiers had, at the time, to free themselves from the slowness of the contract on pawns and simultaneously to avoid the correction. What do the faithful and the jurisconsults think of these loopholes? They still dare to talk of opposing conscience and good laws to bad instincts!

"In carry-overs, says Mr. Deplanque, we frequently see the interest rise to 10 0/0 of the sum lent for a fifteen-day period, the time frame for which these kinds of contracts are generally consented. At this rate, if the capital could always be used, you would gain a small income of more than 250 0/0 a year. In any case, there is no operation on the Stock Exchange that is better than this one."

" There are every day poor devils of imbeciles who are condemned as usurers for having foolishly given their money at 12 or 15 0/0 a year, against a bill of exchange or other equally serious commitments, to a few sons of families who are hesitant to return it, preferring to have them condemned in the name of public morality. But there's no risk of being accused of usury for lending on deferred terms at 23, 50 and 100 0/0 a year. So long, wise man" (Almanac of the Stock Exchange).

Let us illustrate with a few examples the excellence of the reporteur's position.

I possess 60,000 fr. which I'll need in a month or two; I can't commit them to a trading business for such a short time, and in order not to leave them sterile, I'm doing the following operation: I'm buying 3 0/0 at 67 in cash, and I'm reselling it immediately at the end of the current at 67 35. My funds will be available for the time when I need them, and they will have earned during this month 35 cent. of profit per coupon, that is, a rate of 5 fr. 40 0/0 per annum.

If I want to prolong my operation:

I made an initial carryover at the end of July. I have to deliver to X the securities I sold him; however, I don't need to release my capital yet. I then buy a sum of securities equal to that which I must deliver: my last seller will make the delivery to X, and receive from him the sum which I had to receive myself. I thus keep my securities. I can resell them at the end of August, and repeat from month to month, or from two months to two months, the same operation. In this case, my first purchase becomes an investment transaction; my purchases at the end of the month are speculative transactions: they are consummated within the legal timeframe.

It's good to use this method when, at the end of the contract, funds are in decline. Thus, I bought cash 4 ½ at 89; I will resell it at the end of the next month at 89 75. At the time of delivery, 4 ½ is at 88. It's in my interest to buy back annuities, because I benefit from the difference between 88 and 89 75, which is 1 fr. 75, whereas by delivering my securities bought at 89, my added value is only 75 centimes. So I can wait for the rise. If I'm forced to actualise, I lose nothing on the decline, because I've sold at 75 centimes profit; only I'm short of earnings.

When, on the contrary, funds are rising at the time of delivery, the first operation must be consummated, unless an identical one is repeated the following month. Therefore, in the previous example, supposing that the funds are at 90 fr., I won't buy at 90 to deliver at 89 75; it's my buyer who profits from the added value of 25 centimes. But, once again, I lose nothing, since I receive 89 75 and have paid 89.

The operations we have just described are relatively honest. The clever are not content with this. They rush to sell, make new carry for the same value, resell and carry excessively, crushing prices and pushing down the price in order to be able to buy back at low prices, in liquidation, the securities they are obliged to cover their carry.

They use delay to prolong an operation that would result in a loss, and to temporarily avoid execution.

Example. - I purchase 25 shares in the Banque de France at 3.685 fr. The decline is declared, and I am obliged to sell at 3.675; that's a 250 fr. loss for me if I end my operation there. But I have faith in the return of the rise: at the same time as I sell at 3.675, I repurchase at the end of the current term at 3.680, assuming that the carry rate is 5 fr. I pay the 250 fr. to my deficit in liquidation; only my operation is not finished; I can, if the rise returns, cover my loss and withdraw with a profit. You can repeat the same process from month to month, and get carried forward indefinitely. The stockbrokers find their profit in this, as it's double commission, since there's a double operation; as for the speculators, with rates of 4 to 60 0/0 per liquidation, they often meet with slow and painful agony instead of the violent death that they wanted to avoid.

Just like exchange and securities, carry overs are listed on the Stock Exchange. The transactions resulting are subject to the same rules as others: they may not be carried out for more than one month for rail shares, nor for more than two months for other securities.

We call carry on premium, in the first sense that we have given to the word carry, an operation by which we buy firm securities at the end of the current term, which we resell at premium at the end of the next term. Since selling at a premium is more expensive than selling outright, the carry is higher; only, in the event of a fall, you run the chance of not seeing your securities raised, and of remaining a buyer of funds that you might have had an interest in getting rid of.

We have mentioned three types of market:

Spot;

Futures;

Forward and premium.

The purchase and sale, following one or other of these three modes, can be combined two by two in all possible ways, at the choice of the players, according to their calculations and interests.

Speculation is either on the rise or on the fall. In the first case, you buy to sell; in the second, you sell before buying. Thus, prices are rising; I become a buyer of 3 0/0 at 70 fr., and wait, to sell, until the annuity has risen to 70 50 or above. - Conversely, the decrease goes crescendo; I sell at 69, and wait to buy until the price is below this rate, at 68 50 for example.

Thus, it results that bearish transactions are necessarily forward-looking; that it is in the interest of the bearish to discredit values; that the government consequently has the right and the duty to stop, by all means that the freedom of transactions authorizes, this debacle: for it is its own credit that is sought to be ruined, at least concerning annuities, moral credit in all cases, material credit if it needs to borrow.

§ 1 upward transactions.
You can buy spot or forward.

a) If you buy spot, you can resell: 1o spot; 2o firm; 3o at a premium, as soon as the price rises.

Futures, you can:

b) Buy firm, sell: 1o firm, 2o at premium:

c) Buy at premium and sell: 1o firm, 2o at premium.

Let's take some examples.

a) I buy a cash annuity of 1,500 fr. 3 0/0 at 70, that is, a capital sum of 35,000 fr.

1. I sell them the next day for cash at 70 20, that is 35,100 fr.: difference to my profit, 100 fr.

2. I sell them firm at the end of the month at 70 60, the carryover rate being 60 c.; profit, 300 fr.

3. I sell them at a premium at the end of next term at 71 including 1, the premium annuity always being the most expensive, that is 35,500 fr.; excess to my profit, 500 fr., whether the securities are raised or not. If they are not raised, it's that there's a decline, and I remain a purchaser of public funds while awaiting the rise.

b) I bought firm, at the end of the current term, 25 shares in Comptoir d'escompte at 670 fr. that is, in capital, 16,750 fr.

1. I sell them firm, at the end of next term, at 680, that is 250 fr. to my profit. In this case, I'll have to take delivery on my deadline. If I don't have 16,750 fr., I can't resell for a longer period than I bought.

2. I sell them at a premium of 5, at the end of the current term, profit to my profit, 125 fr., if the shares are raised. If they aren't, it's that there's a decline, and in the latter case, as I need to sell in order to raise myself, the purchase being firm, I've made a false speculation. Let’s suppose I'm obliged to trade at 663, I will receive 16,575 fr. against 16,760 fr. that I will have to pay: the difference to my detriment is 175 fr. from which I must deduct the premium of 125 fr. that remains, reducing my deficit to 50 fr. In this market, losses are unlimited.

c) I buy at a premium of 10, at the end of the current term, 50 Nord at 890; that is, in capital, 44,500 fr.

1. I resell them firm at 894; difference to my profit, 200 fr. If the shares have fallen to 885, as I have paid a 500-fr. of premium, it is in my interest to raise them; because, by reselling at this price, which is 44.250, I lose 250 fr., whereas not taking delivery, I lose the 500-fr. premium. In this market, the loss cannot exceed 500 fr.

2. I resell them at a premium including 5, at 896; that is 44,800 fr.; difference to my advantage, 300 fr. if delivery takes place. If it doesn't occur, it's that there's a drop, and the 250 fr. premium stays with me. But I paid a 500-fr. premium myself; if I have to forfeit it too, my deficit will only be 250 fr.

This last example is a premium-versus-premium operation, to which we will return to.

§ 2. downward transactions.
They are necessarily futures.

a) I sell short bonds and wait for the downturn.

Thus, I sell 50 bonds of the city of Paris at 1,120 fr. which is in capital 56,000 fr. Between the time of the market and the expiry, they fall to 1,110; I purchase at this price (spot or forward); difference to my profit, 500 fr. - If the price remains at 1,120, I gain nothing, but I only lose the brokerage fees. If the price goes up instead of down, my loss can become considerable.

b) I sell at short premium.

Example. - I sell at a premium of 1 50, at the end of next term, 4,000 fr. of annuity 4 0/0 at 80; that is, in capital, 80,000 fr., premium, 1,500 fr. If the fall occurs, and the annuity is at 77 at expiry, the securities will not be raised: I won't need to buy; I'll earn the 1,500 fr. - If there is a rise, and my buyer takes delivery, I'll lose the difference between the sale price and that at which I will be obliged to buy, that is 1,000 fr., in the event that the 4 is at 81. The loss, in this circumstance, is not limited to the short seller; it is limited to 1,500 fr. for the buyer.

c) I buy at a premium and sell firm at the very instant.

Example. - The 3 0/0 at premium of which 1 is at 81 at the current end, and the annuity firm 80 60. I purchase 1,500 fr. of annuity at the first rate, that is, in capital 40,500 fr., premium 500 fr. I immediately resell them on a firm basis at the second rate 80 60, that is, in capital 40,300 fr.; difference to my detriment, 200 fr. If the drop occurs, in accordance to my predictions, and the 3 falls to 79, I cancel my first market by forfeiting the premium, and I buy firm at 79; that is, in capital, 39,500 fr. I sold 40,300 fr; gross profit, 800; from which we must deduct

the 500-fr. premium that I forfeited; net profit, 300 fr. - the rise holds until the time of delivery: I actualize my purchase at a premium, which costs me 40,500 fr. and my loss is limited to 200 fr.

§ 3. complex operations.
The transactions which we have just described the mechanism is comprised of the different types of market analysed in the first part of this chapter; those which follow are combinations of the operations themselves: they present an infinite number of complications. We use them when the fluctuations of the quotation are indecisive, sometimes increasing, sometimes decreasing. We will mention the most commonly used.

1. Upward or downward transactions.
If the variations are not considerable:

I purchase a firm of 25 shares of the Bank at 2,700, that is 67,500 fr., and I sell 50 at a premium, including 10 at 2,705, that is 135,250 fr. The securities will be raised or not.

1. If they are raised:

I'll have to repurchase 25 shares at the price of the day. The rise is permanent: I've made a false speculation. But if my predictions come true, there have to be alternatives of rise and decline; I purchase on the decline at 2.702, which is for 25 shares, 67.550 francs.

Thus, I have on the one hand:

25 shares at 2700, that is 67,500 fr.

25 - 2,702, - 67,550

-------- -------- --------

Total 135,050

I resold the whole 135,250

difference to my profit 200 fr.

The buyer with a premium of 2.705 will take delivery if only the shares are at 2.696, because he loses 9 fr. per share, that is 350 fr., while if he forfeits his premium of 10 fr. per share, he loses 500 fr.

We have assumed that the second purchase is more expensive than the first: the opposite could occur; the profit would then be increased accordingly.

2. If the securities are not exercised:

I may find myself a seller not only of 25 shares, but of 50, because I had to put myself in a position in anticipation of delivery. I sold at my own risk and perils, at 2,695 let's suppose, that is to say in capital 134,750 fr.

I have to pay 135,050

--------

Deficit 300

But the premium of 500 fr. remains with me, and I find that in the end I have earned 200 fr.

The favourable chances of a market of this kind are therefore subject to the two essential conditions we have talked about, that is: perpetual oscillations in the quotation and minor but considerable variations. The consummate players are the only ones who can foresee these occurrences.

If the variations are considerable:

I buy 10 x at a premium.

I immediately resell 5 x firm; I'm at a loss, since the firm sale is cheaper than the premium one.

I wait to sell the remaining 5 x until the rise has returned to the point where it covers my deficit and gives me a gain. In that case, the transaction ends there.

If the fall is below the rate at which I sold the 5 x, I cancel, by forfeiting the premium, my first purchase of 10 x, which costs me more than I sold, and I repurchase at a lower rate the 5 x that I have to deliver.

2. Premium-versus-premium transactions.
They have the advantage of limiting the losses; by contrast, they yield little profit. They are based on the fact that the higher the premium, the lower the price. Thus a premium of 1 franc is cheaper than a premium of 50 centimes. - These kinds of deals require a great deal of experience of the Stock Exchange and are not good for beginners.

Example. - I buy 1,500 fr. of 3 0/0 annuity, including 1, at 80. I resell them immediately at 80 70, including 50 c.

1. If at expiry the prices increase, the premiums are lifted, and I earn the difference of 70 c. per coupon, which is 350 fr.

2. If they are in decline, the buyer forfeits his premium of which 50 c, that is 250 fr., I forfeit mine of which 1, that is 500 fr., my loss is only 250 fr.

3. If they are at par or close to it, at 80.05, for example, my buyer does not lift his premium, which remains with me, which is 250 fr., and I resell at 5 centimes of profit, which is 25 fr. for a total of 275 fr., except the deduction of brokerage.

Another example. - Conversely, I purchase at 80 70 including 50, I resell at 80 including 1.

1. If at expiry the price is on the rise, my loss is limited to 70 c.

2. If the price falls and the premiums are waived, I receive 1 fr. and give only 50 c.; my profit is 50 c.

3. If the fall is not steep enough to prevent my buyer from taking delivery, that is to say only 60 c, for example (79 40), I forfeit my first market and repurchase at 79 40; as I am a seller at 80, my gross profit is 60 c, from which the 50 c. premium I forfeited must be deducted; net profit, 10 c.

Another example. - I sell 10 x at a premium of which 50 c. at the end of the current term; I repurchase 10 x at a premium of which 1 at the end of the next term.

If at the end of the month the 10 x are not raised, I earn the 50 c.; which halves my premium including 1.

If they are lifted, I purchase the 10 x I have to deliver at the end of the current term, and I remain the buyer of the first 10 x which allows me to profit from the chances of a rise. - That's what we call carrying over on premium.

You can still purchase a quantity of values at a premium of 1, and resell twice that quantity at a premium of 50. If the securities are not raised on either side, the transaction is null.

Conversely, you can purchase a quantity of securities at a premium of

which 50, quantity of shares at a premium of which 50, we resell twice as many at a premium of which 1.

3. Arbitrage on public securities.
It's an operation which consists of exchanging one value for another - of 4 ½ for 3, for example - in order to profit from the difference. It is based on the fact that the various kinds of funds are not always at the same rate; thus 3 0/0, on which is the preference of speculation, is more expensive than 4 and 4 ½. It is at 67 when 4 ½ is at 90; for the two annuities to be at the same rate, it would have to be worth 100 ½ 50 when 3 costs 67.

Example of an arbitrage operation. - I possess a 1,500-fr. 3 0/0 annuity. The 3 rises to 85, while the 4 ½ remains at 105. I sell at 85 and actualize a capital of 42,500 fr. With this sum I repurchase in 4 ½, at 105, 1,818 fr. of annuity at the price of 42,420 fr. If I limit my operation there, my annuity has increased by 318 fr. and I have 80 fr. remaining on my capital.

But if I wanted to make a speculation, I was led to change my investment in the hope of seeing the 4 ½ increase and the 3 decrease; I am therefore halfway through the toil. Let’s suppose that my prediction is actualised: the 4 ½ is at 107 and the 3 at 80, I sell my 1,818 fr. 4 ½ at 107.

Thus 43.228 fr.

I repurchase at 80 1,500 fr. of 3 0/0, hereto 40.000

--------

Difference to my profit 3.228

Plus the 80 fr. of the first operation 80

Total profit 3.308

Thus I find myself, as before, the possessor of a 1,500-fr. 3 0/0 annuity, and I have earned 3,308 fr.

4. Means to improve false speculations.
We have already indicated how by means of carry-overs

you can prolong an operation that has become bad at the moment of liquidation. There are still other resources, which we need to talk about further.

1. I have short-sold annuities at 80 50. The rise occurs; I am forced to purchase at 81 to make my delivery. I lose 50 c. per coupon if my transaction ends there. But I believe in the return of the decrease. I sell at the end of next term at 81 30, the carry cost being presumed to be 30 c.; I pay the difference of 50 c. in liquidation, and I remain a forward seller while waiting for the decrease.

2. I purchased 1,500 fr. of 3 0/0 at 80; the annuity falls to 78; I purchase the same quantity at this price. I find myself the purchaser of 3,000 fr. of annuity at the average price of 79; as long as the funds rise above the latter figure, I'll have a profit. That's what we call averaging down.

3. Conversely, I short-sold 1,500 fr. of annuities at 80. Then the price increase occurs to 81; I resell the same quantity of shares at this price. I find myself a seller of 3,000 fr. of annuities at the average price of 80 50. Provided that the decrease comes back below this last figure, I'll be able to buy at a profit.

4. Bullishly operating, I purchased 20 x. This is when the decrease occurs; I'm at a loss. But I resell 40 x. Buyer of 20 x, seller of 40 x, I remain seller of 20 x. I wait for the purchase until the decrease allows me to at least cover the loss from my first market. - This operation, which began on the downside, ends on the upside.

5. Conversely, I sold short 1,500 fr. of annuity at 80. Then the increase occurs, at 81. I purchase, not 1,500 fr. but 3,000; I liquidate at a loss from my first market, but I remain the buyer of 1,500 fr. of annuity, and I wait, to sell, until the increase can compensate me for my deficit. - This speculation, which began on the downside, ended on the upside.

We have reviewed the most remarkable combinations of speculation. We do not claim to have enumerated them all, for they take on, like the Proteus of the Fable, the most diverse forms. At every moment, we invent new ones. What characterises them in general is that, although they may be used, by exception, for serious operations, they usually have no other motive than gambling, and fall outside the scope of productive speculation, and under the prohibitions of the law. But the law, the gambler defies it: what he wouldn't give to be able to defy fortune as well!...

It will be without any doubt useful to end this chapter with a summary of the necessary rules of arithmetic for the solution of the problems used in speculation.

We certainly won't stop there: How much do 25 shares at 750 fr. cost? But more than one reader would perhaps fumble to solve this other, slightly less simple one: How much does 2,250 fr. of 4 ½ annuity cost at 90? - 90 is not the price of 1 fr. of annuity, but the price of 4 fr. 50. Therefore, we need to find out how many times 2,250 contains 4 fr. 50. - Answer: 500 times. - It is by 500 that we must multiply 90. - Product : 45,000 fr.

How much does 3,000 fr. of 3 0/0 annuity cost at 67?

Answer: 67 x 3,000/3 or 67 x 1,000 = 67,000 fr.

Almost all calculations you need to make on the stock exchange can be solved with the help of the rule of three. The most important thing is to know how to set the proportion. Here's a summary of the principles to be followed.

One of the terms is always: A capital C is to a capital c; the other: An interest I is to an interest i. - C must correspond to I, and c to i.

Examples:

C : c : : I : i

c : C : : i : I

I : i : : C : c

The custom is to place the unknown at the last term. Let C be the unknown: c will be the third term, I the second, and i the first:

i:I::c : x = C

Let's apply this theory to our calculation.

1. Let's return to the one from earlier: how much does 2,250 fr. of annuity cost at 4 ½ 0/0 to 90?

When 4 fr. 50 of annuity (i) costs 90 fr. (c), how much will 2,250 fr. of annuity (I) cost? - The unknown is C. Thus, for the following proportion:

Proportion : i : I :: c : C

In numbers : 4 50 : 2,250 : : 90 : x

Hence : x = 2,250 x 90/4 50 = 45, 500 fr.

2. What is the rate of a public loan at 5 0/0 negotiated at 80 fr.?

When 80 fr. of capital (c) yields 5 fr. of annuity (i), how much will 100 fr. (C) yield? - The unknown is I, and the proportion must be written as:

Proportion : c : C : : i : I In numbers : 80 : 100 : : 5 : x Hence : x = 100 x 5/80 = 6 fr. 25

The loan is contracted at 6 fr. 25 0/0.

3. The 3 0/0 is 67 and the 4 ½ is 90: which is more expensive?

There are two ways of solving this problem: the first consists in finding the rate of each of the prices and making the difference; but the following is more expeditious.

When 3 fr. of annuity (i) cost 67 fr. (c), how much does 4 fr. 50 (I) cost? - The unknown is C, and we write:

Proportion : i : I : : c : C Numbers : 3 : 4 50 : : 67 : x Hence : x = 4 50 x 67/3 = 100 50.

Since 100 50 is in 4 ½ the price corresponding to 67 in 3 0/0, and whereas the former is only at 90, 3 is the most expensive. - How much more expensive is it per franc of income?

From 100 50 - 90/4 50 that is 10 50/4 50 or 105/45 or 2 fr. 33.

This problem can be solved using the unit or denier method. When 3 fr. of annuity (I) cost 67 fr. (C), how much will 1 fr. of annuity (i) cost? - the unknown is c, and we pose:

Proportion : I : i : : C : c In numbers : 3 : 1 : : 67 : x

Hence : x = 67/3 = 22 fr. 33. Likewise : 4 50 : : 90 : x

Hence : x = 90/4 50 = 20 fr.

The 3 is 22 33 in denier; the 4 ½ is at 20 in denier. - Difference 2 fr. 33 c.

4. How much, with 60,000 fr., can we purchase from 3 0/0 to 66?

When with 66 fr. (c) you have 3 fr. of income (i), how much will you have with 60,000 fr. (C)? - The unknown is I and I pose:

Proportion : c : C : : i : I In numbers : 66 : 60, 000 : : 3 : x Hence : x = 60,000 x 3/66 = 180,000/66 = 2,727 fr. 27.

You can therefore acquire 2,727 fr. of annuity.

5. 92,500 fr. have produced for me, in a carry-over operation, 815 fr. in one month: what rate per 100 a year does this profit represent?

I say: 815 fr. in one month gives, over twelve months or one year, 9,780 fr.

The question is therefore this: if 92,500 fr. (C) produce 9,780 fr. (I) in a year, how much do 100 fr. (c) produce? - The unknown is i.

Proportion : C : c : : I : i In numbers : 92,500 : 100 : : 9,780 : x Hence : x = 9,750/925 = 10 fr. 57

The carryover in this case therefore represents a rate of 10 fr. 57 c. 0/0 per annum.

6. If it is about foreign funds, the mode of procedure is no different. When 5 ducats of Naples annuity are worth 105 in capital, how much will 500 ducats of annuity be worth? Proportion : 5 : 500 : : 105 : x D’où : x = 10,500 ducats.

But how much is that in francs, given that the ducat is valued at 4 fr. 40 c.? - It's enough to multiply 10,500 by 4 40, which gives 46,200 fr. - In fact, 1 ducat gives 4 40 just as 10,500 ducats give x fr. - 1, that's i; 4 40, I; 10,500, c, and x the unknown, C.

Proportion : i : I : : c : C In numbers : 1 : 4 40 : : 10, 500 : x

As 1 does not divide, it is sufficient to multiply by 4 40.

7. The Austrian florin is worth 2 fr. 60: how much are 10,000 florins worth in francs?

Since 1 doesn't divide, it's 2 60 x 1,000, or 2,000 fr.

8. The type of foreign currencies is generally higher than ours, so the calculation indicated in numbers 6 and 7 is applicable almost everywhere. However, if the type were lower, there would still be nothing to change, if not in the position of the terms: the unity of the first term, it is then the foreign type.

Example. When the Amsterdam gros denier is worth 54 centimes, how much is 248 deniers worth in francs?

1 denier gives 54 centimes as 248 deniers x fr.

Proportion : 1 : 54 : : 248 : x Hence : x = 248 x 0 54 = 133 fr. 92.

9. Conversely, we may have to convert francs into foreign values.

When the Spanish pistole is worth 15 fr., how much is 36,000 fr. worth in pistoles?

I say: 15 fr. gives 1 pistole as 36,000 fr. gives x.

Proportion : 15 : 1 : : 36,000 : x.

1 does not multiply; therefore : x = 36,000/15 = 2,000 pistoles

It would be superfluous to further multiply the examples.

The commercial brokers have the right, concurrently with stockbrokers, to sell gold and silver materials; but only stockbrokers can ascertain the price. The gamble is forbidden on these values, as on all the others.

Gold and silver have their price at par; they lose or gain on the market, depending on the circumstances. Major political crises cause a rise in the price of gold, because it allows the transport of large values under a small volume.

The agio, that's the profit, and the discount, the loss.

Gold bars, coins of 20 and 40 fr., agio, 2 fr. 50 for 1,000, means that gold earns 2 fr. 50 per 1,000 fr.

Instead of the word agio, there would be a discount, that is, gold would lose 2 fr. 50 per 1,000 fr.

Gold bars, coins of 20 and 40 fr. at par, means that there is neither agio nor discount.

Gold bar, at 1000/1000, it's the purest gold, it is worth 3,444 fr. 44 c. at par, per kilogram.

Gold bar, 900/1000, it's gold with a tenth of alloy. Price at par: 3,100 fr. per kilogram.

Silver bar, 1000/1000. Price per kilo: 222 fr. 22.

Ditto at 900/1000: 200 fr. 22

We could say that this process would be to the bill of exchange what, in terms of rapidity, the inland waterway is to the electric telegraphy.

The exchange implies reciprocal debts between countries.

A, from Marseille, sold B, from Lille, soaps for a sum of 10,000 francs; B supplied C, from Marseille as well, 10,000 francs worth of oils. It is not necessary to move a cent to settle such a deal. B wrote to his debtor C: "Pay your compatriot A the 10,000 fr. that you owe me and that I owe him myself. The three parties gain in this arrangement, time savings and security.

When the seller and buyer have an equal interest in the negotiation, the exchange is at par.

But it's not always so.

New Orleans ships 10 million worth of cottons to Rouen; Lyon sells 8 million worth of silks to New York. The Lyon merchant receives his payment on paper from Rouen; while the New Orleans merchant receives his from New York. If these cities only exchanged with each other, it would be necessary to transport the additional 2 million from Rouen to New Orleans in order to complete the accounts.

Commerce undoubtedly has more expeditious resources; the relations that we have assumed between four places are nowhere circumscribed in such a small circle. Each business centre is in correspondence with the main markets of the world. Only, between two places there may be an inequality of claims, as in the example above, and then the paper in such and such a place is more or less in demand, more or less expensive. Hence the difference in the price of exchange.

The exchange from a place to another is low, when that place has a large money of the other, that is to say, when it has more to pay than to receive. It is high in the opposite case, when it has more to receive than to pay. France owes 10 million to America, which only owes 8: the exchange is low for us and high for the Americans. In other words, the American will purchase the paper on France below its value, because it is abundant; the French will pay the paper on America above its nominal value, because it is scarce.

The abundance and scarcity are therefore, for commercial instruments as for products, causes of rise or fall, of high or low prices, of costliness or the inexpensiveness of the market.

These negotiations emerge, as you can see, from the domain of speculation; they essentially belong to commerce and the bank. How do they end up among the hands of stockbrokers? As we have said, the Stock Exchange is the market for capital condensed in the form of securities, and the law only allows stockbrokers to act as

intermediaries. They do not purchase or sell other than on commission. They have nothing to do with fixation of prices; the ascertainment alone is reserved for them. They are neither bankers nor merchants; they exploit banking and commerce. They enjoy an old privilege: it has always been so, and they hope it will remain so for a long time to come.

Meanwhile, in practice, always ahead of legislation, gradually freed itself from the monopoly: exchange transactions were de jure and de facto returned to public and private banks and discount banks.

It's not that our public officials care. We have already seen how they are good princes with the coulissiers and the courtiers-marrons. Their liberality does not fail in this instance. What, after all, are miserable commercial instruments to people who have their hands on annuities, railroads, canals, mines, factories, forges, banking, insurance, etc.?

The preceding is enough to give an idea of the nature of the contract of exchange, its necessity, the combinations of which it is susceptible, the causes of variation between the different places, and the rise and fall on the same place at different times. It remains for us to complete these general notions with a few technical details.

We distinguish between two types of currency: 1o Real currency, which exists materially in gold, silver or billon coins. - 2o Exchange money, which does not always exist in metal; this is the name sometimes given to a sum of cash or fractions of cash.

With us, the franc is both the effective currency and the currency of account or exchange. But this is not the case everywhere. In Holland, for example, the livre de gros, adopted for exchange negotiations, does not exist in metal; it represents 6 florins of actual money.

The price of exchange between two places is assessed by comparison of their actual or exchange currencies, the first serving as a type, the second as a monetary unit.

We say that a place gives the certainty when its currency serves as the fixed term in the comparison; the one that provides the moving term gives the uncertainty.

Thus, in the exchange between Paris and London, the fixed term of comparison is the pound sterling; the variable term is its value in francs, which may be, depending on circumstances, 25 fr., 24.95 fr., 25.10 fr. Between Paris and Lisbon the fixed term is 5 fr., which is worth 495, 500, 504 reis, more or less.

Between two places, there is necessarily a fixed term and a variable term. It is neither an advantage nor a disadvantage to give one or the other. As usage has established them, they are retained, they are never transposed: Paris always gives the uncertain to London and the certain to Lisbon.

METHOD OF EXCHANGE VALUATION between Paris and a few foreign locations.

CERTAIN UNCERTAIN

Paris, 3 fr. Amsterdam, 53 to 58 denier de gros.

--5 fr. Lisbon, 500 reis, more or less

Hamburg, 100 lubs Paris 185 fr. more or less

London, 1 pound sterling --, 25 fr, --.

Berlin, 1 rixdale -- 3 fr. 70 --

Madrid, 1 pistole -- 15 fr.

Livorno, 1 piaster -- 5 fr. 15 --

Naples, 1 ducat -- 4 fr. 40 --

Vienna, 1 florin -- 2 fr. 50 --

St. Petersburg, 1 paper rouble -- 1 fr. 10 --

This usage allows only one term to be used in the price of exchange. Thus, these expressions: London 25 10, Amsterdam 57, mean that 1 pound sterling payable in London is bought in Paris for 25 fr. 10 c.; that for 3 fr. in Paris, one has 57 gros deniers payable in Amsterdam.

The exchange between French cities is valued in francs. It is the same with certain foreign places which have adopted our currencies. In this case, it is expressed in so much for 0/0 loss, together with the name of the city with the unfavourable exchange.

Thus Genoa 2 p. means that 100 fr. payable in Genoa lose 2 0/0 at X and are worth only 98 fr. there. Bordeaux 1/5 p. means that 100 fr. payable in Bordeaux costs 99 fr. 4/5 at Z.

The exchange transactions require from those who engage in them, not as intermediaries but as traders, an extensive knowledge of the commercial relations between the various markets of the globe, since the abundance or scarcity of paper on these markets determines the exchange rate. Bankers are in a better position than anyone else, because of the multitude of their relationships, to know the needs and resources of each place.

The exchange also presupposes knowledge of foreign currencies and their respective values at par; without it, it would be impossible to know if the exchange is favourable or not for a given city. For example, this formula, Naples 4 20, means that a Naples ducat is worth 4 fr. 20 c. in France; but which of the two currencies loses on exchange? You need to know the value of the Neapolitan ducat: it is 4 fr. 40 c..

The formula used between cities which use the same currency, x 0/0 loss, is infinitely simpler. What should we conclude from this? - That the monetary unit, applied to all civilised nations, of the same kind as the unit of weights and measures, would simplify commercial relations by 90 0/0, and would do away with a multitude of functions living at the expense of production, of imbroglio and complications of accounts.

- When will this reform occur?

- Well! questions of concert and equilibrium are far more important.

Our intention here is not to satirise an entire era, an entire society. Moreover, we would be failing to our own principles, we would be imitating theology if, instead of seeking the causes of contemporary dissolution in poorly defined principles, poorly differentiated notions, inaccurate formulas, poorly balanced forces, above all in this state of social war that the privileged classes have always created from time and nurtured as the expression of freedom and order, we attacked individuals and corporations en masse, that is to say, all of humanity.

Let others undertake, if they can, if they dare, the purification of the social body! For us, who are neither preachers nor Jacobins, our task is merely to interpret facts and to clarify ideas. Too enlightened on the mysteries of fortune to guard any resentment, it's sophisms that we're at war with, not men: it's for a science that we're fighting, not for interests. And what science? Justice, in its application to the Economy…

The coup de théâtre of December 2 has imposed silence on the defenders of the Revolution; it has not silenced its enemies.

There are people who, with regard to Stock Exchange speculation, have seized the opportunity to kick out at socialism, and to support, against our critics, the usefulness and high morality of gambling.

Others, who had had the distinguished glory of suffering persecution and captivity for the social republic, who since, freed from Belle-Isle, immediately engaged in the certain operations of the Stock Exchange, make the morality of agiotage consist in evading its uncertain conditions ; men who, in 1848 had begun the crusade of labour against the coalition of capital, have cried out that we wanted to take the world back to primitive barbarism, to create equality of misery, and to make the rejuvenated France of 1852 eat the black broth.

Lastly, others, with M. Mirès in the lead, admit that for the past three years we have witnessed great misfortunes, on which great fortunes have risen; but distinguishing, after us, the useful speculation of the unproductive and agioteuse for which they voluntarily make an exception, try to obtain grace, tolerance, for the needy speculator, maker of dupes and victims, in favour of the honest and austere financier, who...., of whom...., to whom...., etc. M. Mirès speaks from the abundance of his heart. He knows the needy, and he wouldn't ask for anything better today than to serve as a Patron of talent and virtue.

A few facts in response to these proud theoreticians will naturally find their place here, and complete the elements of the question that we submit to our readers.

§ 1. How uncertain operations, indifferent in nature, lead fatally, in the present state of things, to swindling and theft. - Complicity of science and law. - Inequality of position among players.
As we pointed out in our Introduction, in a state of affairs founded on the complete absence of mutuality between the organs of production and circulation, no serious law, be it preventive or repressive, against the abuses of which the Stock Exchange in the first place, and after it the limited partnership, are the theatre, is possible.

This impotence of the legislator against acts which all, to a greater or lesser degree, reduce to swindling and theft, constitutes, according to us, the reduction to absurdity of the theory which creates them, and which consequently finds itself condemned to uphold their innocence, to affirm their legitimacy.

Thus, as the theory, so the practice; as the science, so the society. Political economy, as left by Adam Smith, J.-B. Say, D. Ricardo, Malthus, etc., and as represented by the Academy of Moral and Political Sciences, is nothing more than the description of the social chaos in which humanity has been wallowing for sixty centuries. Is it any wonder that the followers of this so-called science have made it, in recent years, a tool of counter-revolution?...

May the reader give us a few minutes of attention: our intention is not to deceive their good faith.

What moral law or principle of justice can, internally, defend the futures markets?

Certainly none. Firstly, the condition of uncertainty is the essence of the production and circulation of values: on the other hand, the term - or, to say it better, the delay between the delivery of the commodity and the receipt of the counter-value that pays for it - is no less essential to the condition of credit and exchange.

Chance, by itself, is neither moral nor immoral. Undoubtedly, in a society organised on the principle of mutual guarantee, all combined efforts would tend to eliminate chance: but where this mutuality is not decreed, agiotage becomes preponderant, and any law that purports to restrict it in any order of transactions whilst leaving it free in others would be an arbitrary law, a law of lies and iniquity.

In two words: mutuality operates against chance, as we see with insurance; agiotage operates on it. As no law or mutualist constitution has determined the rights and duties of citizens in this respect, their legal condition is gambling: this consequence is forced.

From this it follows that what would be illicit and culpable in a mutuality system, that is, the pursuit of agio for itself, instead of the product, ceases to be so in a system of absolute insolidarity, where everything is left to fortune.

This posed, we ask: Which of these two is more moral in itself, more useful, more in keeping with eternal justice and the economy, of these two systems: mutuality or licence? Does it depend on the will of the legislator, the sophist, whether it is indifferently this or that?

And that's what we answer, against the economists: Look at the facts.

According to official documents, the product of the stockbrokers' service in Paris for 1855 was 80 million, which supposes a mass of transactions of 64 billion, not including the coulisse operations etc.

The serious transactions certainly don't reach more than 3 or 4 billion. The importance of pure agiotage operations is therefore to that of actual business such as 16 or 18 to 1. Is this moral?

Let's add: Is it economical?

It has been dared to say that Stock Exchange operations do not significantly affect agricultural and industrial credit; that it is not true that capital is diverted from its natural destination. What then is the 80 million shared by the stockbrokers, presidents and appariteurs of this immense tripot?

80 million in brokerage fees implies that several hundred million have been engaged to gambling every day: would they not have been better placed in agriculture, to which the Société du Crédit Foncier has not a penny to offer; in commerce, to which the Bank never stops tightening the belts?

Here we are, therefore, as a result of the prepotency left to the uncertain element over the legal element, in a state of chronic, organic, legal demoralisation. Who then, seeing what is happening, dare deny it?

The sole thought of people in the Stock Exchange can be summed up in three words: to win, to gamble, to make money! All, or most of, have an income, a business, an industry, a state, at last, a means of livelihood. So what do they ask of agiotage, then? Profits without work, without capital, without entrepreneurial spirit, without genius. The Stock Exchange has two oscillations, the rise and the fall, just as the roulette wheel has two colours: sell on the rise, purchase on the fall, bet on the red or the black, it's all one. Chance is the great artisan of successes and setbacks.

When we are quoted the superb profits earned by the fortunate in a game played the fairest in the world, we ask: What is this element, chance? Is it an economic power, a principle that creates useful and exchangeable values?

"Most of the stockbrokers, said the Bulletin de la Presse of January 18, 1856, had received, since yesterday, from the province, an infinite number of telegraphic dispatches that revoked sell orders, and replaced them with purchase orders."

That is like the millstone spinning empty, in the expression of J.-B. Say. A displacement of capital, sterile from the point of view of national production, fatal to the victims who lose their means of livelihood and work: such is the Stock Exchange. It is neither more nor less than a transformation of the much decried lottery. The police excessively hunt the rare clandestine gambling dens where a few sons of families risk part of their income with girls; they protect the stock exchange where fathers swallow up, with swindlers, their wives' inheritance, their daughters' dowries, the establishment of their sons. Thus, as the professor says, there is a great and a little morality.

As long as we only get together to gamble, what does it matter whether we're gambling on chimaeras or on realities?

As soon as we gather only to gamble, what does it matter whether we gamble on chimaeras or on realities?

"The history of tulipomania in Holland is as fruitful in its teachings as that of any other period. It was in the year 1634 that the main cities of the United Provinces began to indulge in a traffic that destroyed every kind of commerce. The gambling fury it ignited provoked the greed of the rich and the foolish hopes of the poor, raised the value of a flower beyond its weight in gold, and ended, as all frenzies of the same kind usually end, by all the fury and misery of despair. For every few people enriched, there were a prodigious number ruined. In 1634, people sought tulips with the same eagerness as they did, in 1844, to procure promises of railway shares. Speculation followed exactly the same pattern in both markets. One made the commitment to deliver certain onions; and, for example, when there were only two similar ones on the market, as once arrived, then chateau, land, horses and oxen were sold to pay the differences. We contracted and paid thousands of florins for tulips that neither the broker, the seller nor the buyer should ever see.”

"One can judge how far this mania went, when one sees established by various authorities that there was such a tulip that was paid for in values equal to 2,900 fr.; another variety was paid for 2,000 florins (2,320 fr.); one gave, in exchange for a third, a new carriage, two grey horses and their harnesses; one delivered twelve acres of land for a fourth. There was a speculator who, in the space of a few weeks, made 60,000 florins (69,600 fr.).

"But in the end, the hour of panic struck, confidence vanished, commitments were broken, payments stopped on all sides, golden dreams dissipated. Those who, a week before, had placed the most magnificent hopes in the possession of a few tulips, which would have been enough for them to make a princely fortune, remained with elongated faces and stunned eyes in front of bad onions which had no intrinsic value, and which they could not sell at any price.”

"To conjure the evil, the tulip merchants convened assemblies and made beautiful speeches in which they proved that their tulips were more valuable than ever, and that the panic was as absurd as it was ill-founded. These speeches aroused great applause; but the onions remained no less worthless." (The London Stock Exchange, by J. Francis, translated by M. Lefebvre-Duruflé, senator, former minister).

What dream of a delirious imagination could ever rise to the heights of history? The philosopher's stone was put on limited partnership from 1824 to 1825:

"Among the companies that were springing up daily, one was formed to manufacture gold. It was announced that success was certain. The shares were snapped up with a fury; but, when their investment was completed, the shareholders were warned that, as the costs that would result from the manufacture of an ounce of gold would reach twice its value, the company had to be dissolved, and the payment made would be retained to pay the costs incurred up to that point." (London Stock Exchange, page 272.)

Let's stay with contemporary facts. The human spirit, despite its unbridled passion for gambling, which represents its spontaneity and independence, is repulsed by nothingness: it likes to rely on materialities. Here begins the conversion of gambling into swindling.

"In France as in England, in Paris as in London, the demon of agiotage has turned the heads of those accustomed to the Stock Exchange, and soiled with its contact the most commendable businesses. Lured only by the lure of premiums and by the considerable differences it was possible to cause from one day to the other without risking a lot of money, the men who got involved in these speculations didn't bother to make a choice between the securities of the different companies that they found on the quotation of the Stock Exchange; they accepted them all without distinction, surrounded them all with the same favour, and without realising their actual value, they discounted the unknown future by premiums that they realised within forty-eight hours.”

"Things went on like this for a few months, but soon the profits obtained by the most astute by means of these manoeuvres aroused numerous competitors, who, finding the place taken, the market in industrial shares too circumscribed, threw themselves headlong into operations that were far more uncertain, by discounting, purchasing and selling at a premium, no longer existing shares, having a certain basis, but promises of shares, subscription certificates, - less than that even, - of mere words: for we sold, purchased and quoted at 40 fr. of premium for the titles of a company that still only exists as a project; that has received requests, but has not yet opened a subscription and has not even made any reply to those who have written to it to take an interest in the operation it has in view.”

Thus spoke the Railway Journal on December 28, 1844. It said again, on August 2, 1845:

"To speak only of a recent affair, the Sellière company's receipts for the branches at Dieppe and Fécamp on the Chemin de Fer du Havre, the agiotage was pushed on these values to the point of frenzy. The 36,000 shares representing the company's capital of 18 million were bought and sold several times in the same week. Should we conclude from this that buyers and sellers had different opinions of the business? Not in the least: the same gambler was buying and selling shares on the same Stock Exchange that he didn't own, that didn't yet exist. Thus, one sold receipts to be delivered as soon as they were issued; then one sold forward receipts that one didn't have, that one didn't intend to buy. It was nothing more than an exchange of commitments and payments of differences. Better than all that: most of the time, buyers and sellers know the matter only by the name of Dieppe à Fécamp; that is to say, if they had tried to understand the matter that they were gambling on, they would have had to believe, - and they generally did believe, - that it was a railway from Dieppe à Fécamp: which, incidentally, would have been industrially the most absurd thing."

The Société du Palais de l'Industrie could only be constituted, the monument could only be constructed on condition that the government guaranteed an annual interest of 4 0/0 on the capital invested in the enterprise. No one ever believed, in fact, that a colossal construction, which cost 17 million, was unsuitable for any use other than exhibitions, that is to say, that it was susceptible of producing a few very uncertain profits every five years, was an industrial concern. The State was appealing, in the form of an indirect loan, to private capital for the erection of an edifice that was much more luxurious than useful. In reality, the Palais shares were a kind of 4 0/0, and they only ever received interest guaranteed by the Treasury. Yet from their issuance, the 100-fr. shares at par carried a 30-fr. premium; in 1854, when the monument had not yet been completed, they were quoted at 170 fr. ; they have risen to 176; that is to say, while the 4 1/2, which was better guaranteed, was at 92, the stupid and voracious crowd was rushing on the 4 0/0 at 176, which has now reverted today to 70.

We can already foresee, with these facts, that the position of the gamblers is not equal, which adds particularly to the immorality of the gamble; but here, as on the very question of agiotage, the data are such that it is impossible to formulate, a priori, a condemnation, unless we place ourselves outside the regime that the anarchic, legal economy has made for us, and which it seeks to defend.

Indeed, if the uncertain market, based on real data, with a real object, is permitted; and if gambling, unbridled gambling, is the consequence, will it be a crime for the speculator with capital, whose impregnable position allows him to attack at will, or to remain in anticipation; will it be a crime to profit from the discrepancies that the gamblers' outbursts never fail to produce on the market, to combine the firm with the premium, the cash with the current end of the term?

The public at the Stock Exchange, like the world of production, is therefore divided into two categories: one, by far the most numerous, is that of the exploited; the other is that of the exploiters.

The former, a sheep-like mass, a vile multitude, a hodgepodge of doormen, servants, rentiers, petty bourgeois, greedy labourers, people at every level of the social ladder, know only one thing about the Stock Exchange and its strings: To try their luck. Frankly, they imagine that the things that happen in the Stock Exchange are the same as the lottery; that everything depends on chance or on a calculation of probabilities... Thus, with what air you hear them profess this famous axiom of popular wisdom: Who risks nothing, has nothing! Therefore, thought these philosophers, it's prudent to expose one's nest egg, one's life, on a roll of the dice. Live rich or die! The folly would be to languish in honest ease or mediocrity.

Where does wealth begin? For the craftsman and the servant, it would be a thousand pounds of income; for the industrialist, a triple or quadruple capital; for the middle bourgeoisie, the million, the holy and sacred million! Thus it is reasoned, at least at the starting point. But gambling is like a cogwheel; once the finger has been taken, it is necessary for the body to follow; the merciless machine stops at neither cries of anguish nor torture, and will only return the shreds of a corpse.

- I've only been to the Stock Exchange once; I gained 50,000 fr. I'll never set foot on it again, said a Parisian merchant to his friends. This wise man was not of his time; all his friends thought he was wrong.

Without the slightest experience of business, and completely unfamiliar with the combinations by which the privileged in the temple of Plutus prevent or deal with disasters, the gambler whose imbecility or mediocrity of stake has marked him for the god's supper, plays to the point of complete discomfiture, which is never long in coming. Nothing is more stupid or gluttonous than this animal: it bites at the crudest of baits. Stopping in front of a poster for a spectacle, which he takes for an industrial advertisement, he reads: Chemin de fer de Paris à la lune, and writes to the director for shares. No skill is needed for plucking such goslings. How many gudgeons are needed to fatten a pike? How many passerines for a sparrow hawk's dinner?

how many lambs to feed a lion? how many small fortunes for the small pleasures and mistresses of a nabob? Still, there's no shortage of prey: pikes, hawks, lions and financiers fall asleep every night blessing Providence, which gives daily pasture to all its children.

Among the small, small number of those who earn money on the Stock Exchange, and who form the category of the privileged, we distinguish between the prudent and the skillful.

The prudent make arbitrage operations from one end of the year to the other. These are capitalists who never purchase more than their available wealth; they profit from the decline to invest their funds, and are content, while awaiting the rise, to collect their dividends. They realise their assets four, five, six times a year, more or less, depending on circumstances. They go from Mobilier to Foncier, from Foncier to Rente, from Rente to Chemins de fer, from Chemins de fer to Petites Voitures, from Petites Voitures to Gaz, from Gaz to Omnibus. The wisest of them all make carryovers and become small-week lenders to gamblers who still have a few thousand francs to risk. Their position is excellent from a security point of view: the worst that can happen to them is to remain holders of securities in stagnation, and to be reduced to the half-yearly profits of their investment. They thus draw from 10 to 20 0/0 of their capital. They believe themselves to be eminently useful citizens, and willingly give the virtuous indignation of declaiming against agiotage and parasitism. Stock Exchange newspapers, Stock Exchange manuals, Stock Exchange almanacks propose them as an example; the court preaches them, the city admires them, the multitude envies them; they accumulate the benefits of fortune and the consideration of citizens. Those who can, imitate them: a movement has declared itself in this direction, and is applauded as an amelioration of public morality. That's where we are!

All this world, honest world, elite world, intelligent world, prudent and wise, who plays it safe, accomplice and perpetrator of all extravagances, of all fornications, of all the crimes that have their origins in the Stock Exchange and from which it profits, what purpose does it serve, anyway?...What purpose does its capital serve? Those who advocate it, let alone the supporters of it, should tell us.

As for us, it is impossible for us to have double standards here, to grant amnesty to the slave exploiter when we condemn the trader. The Stock Exchange, says Mr Mirès, is the capital market. We said so ourselves (page 75), and we are happy to meet the leaders of modern speculation. But are they merchants or parasites, these prickers of differences who have no interest in any enterprise, and who would have nothing to collect if there were only serious matters, if each shareholder, as the word implies, remained faithful to his limited partnership, if at least from shareholder to shareholder there were only real exchanges and arbitration?

It is the skillful, joined with the needy, as M. Mirès refers to them, who ignite the gamble, and the prudent maintain it.

Now, as little each person contributes to public corruption, as soon as everyone contributes, it generates immense corruption. This was very well expressed in the Edinburgh Review about railway operations:

"The major frauds we have reported are not the result of the disloyalty of a single individual, or even of a group of individuals; they result from the combined interests of a large number of individuals and aggregations of individuals. Like a story that passes from mouth to mouth and receives a slight addition with each new edition, it returns to its source in an almost unrecognisable form ; in the same way it is with a little abuse of influence on the part of landowners, a little favouritism on the part of members of Parliament, a little intrigue on the part of lawyers, a little collusion on the part of contractors and engineers, a little greed on the part of directors, a little mitigation of probable expenditure and exaggeration of expected profits, that shareholders are deceived in an undignified manner, without the fraud being directly attributable to anyone. " (Revue Britannique, February 1856.)

What else do we say? We admit, with the English writer, that the needy, prudent or skillful individuals, at whose instigation, under whose patronage, and for whose benefit these colossal frauds occur, are perhaps not, in relation to morality, below the general average.

We maintain only by reason of the uncertain element which dominates all transactions, and which no principle of public law is strong enough to ward off, that the works of all these men are evil, their consciences crooked, their speculations immoral; and we add that if a distinction is to be made among them, it will not certainly be in favour of the sophists who try, by vain declamations, to legitimise what the universal conscience reproves.

After the prudent, the skillful.

All speculation, whether industrial, commercial or financial, rests on a calculation of probabilities. In a system of antagonism, where thoughts and interests cannot guarantee one another, no one can be forced to share their predictions with others: that's the law.

But who will distinguish between legitimate and illegitimate predictions? Who will prevent the abuse of confidences and secrets of the State? Who will dare to say before a tribunal correctionnel: The knowledge of such a fact, of such a resolution, had to be made public, because it belonged to everyone, it created a case of force majeure of which no one had the right to prevail?

The introduction of such principles into civil law would imply a revolution, the revolution of mutuality. We therefore remain, by horror of revolutionary justice, in the immemorial anarchy, where they struggle on unequal arms between eager and blind mediocrity, clairvoyant capitalism and the swindling skill.

The skillful are, so to speak, the bohemians of the Stock Exchange. With little capital, perhaps even no capital at all, they speculate every day, selling and buying anyway.

Their liquidations resulted solely in differences. They can live for years, operate on millions, without ever owning a small share, without ever having received a dividend. This is open gambling at its highest expression. By contrast, they are perfectly masters of their terrain: all paths, trails, precipices and cut-throats are familiar to them; they don't need a compass to navigate this labyrinth; they hunt the bounty from the hounds, from the lookouts, from traps; the makers seek them out and protect them, because they use their flair and skill to launch or track the prey, to lead or mislead the pack. Thus, they live well enough from their poaching. If one of them, by chance, breaks his neck or finds himself caught up in the tribunal correctionnel, the next day at the halt we say to ourselves: "He was a very skilful man; what a pity! And after that mournful eulogy, there's no more talk about it.

Here is a specimen of their industry, which we borrow from the Gazette des Tribunaux, for the edification of the predestined. It's one of the thousand ways in which we lead them up or down. The floor is given to the head: he explains how a venture is launched.

"I have, for example, five brokers; I give them each a thousand shares in the company that I want to launch. They arrive at the Stock Exchange. The company is already known through prospectuses. They offer to sell immediately, for cash, the shares that they hold, and offer at the same time to repurchase them in the future, with more or less of a gap, on which gap is still deducted to the amount of a premium.

" I will explain by way of an example. I offer a thousand shares in La Lignéenne for cash and at par, at 100 fr.; I offer at the same time to repurchase them, at the next liquidation, at 110 fr. including a 5 fr. premium. This means that when the liquidation comes, if I don't want to take delivery of the shares I've just repurchased at 110 fr., my seller will keep them, provided I pay him 5 fr. per share.

"He will thus have gained 5 fr. and the share that he had paid 100 fr. will now cost him only 95. He can repeat the same operation for an indeterminate number of liquidations, with the chance of always winning the premium and without any chance of loss, because the worst that can happen is to see the buyer to take delivery if the shares rise, and in this case, they are paid for him.

"That's how it is possible to open a market at the Stock Exchange on the first stock that arrives. You need to find a seller and a buyer. The seller is the one who brings in his shares; the buyer is the one who very easily agrees to take the shares for cash, whatever their value, since at the same time that he takes them with one hand for cash, he gives them with the other hand for time, at a profit. This operation has an immediate effect that produces a rise.

That's when the sheep of Panurge arrive, and the accomplices find themselves stripped of, in return for good and beautiful sounding ecus, the rags of paper on which they seem to make, in their corner, such lively transactions. Now let's look at the reverse.

"Here's how the bearish operate. Without having any shares, they sell more or less considerable quantities, depending on the credit at their disposal. Thus the more a commodity is offered, the more its price falls. When the shares have decreased to a lower price than that at which they sold them, they repurchase them and thus profit from the difference.

"These bearish operations have a major influence on the market: they have the effect of forcing premium sellers to give up their premiums; which necessarily results in a depreciation of value.

Such is the mechanism of Stock Exchange operations for establishing a market, and this is how I went about launching the Lignéenne."

What do these good provincials have to say when they, from the depths of their sub-prefectures, claim, on the indications of a financial bulletin - often deceived, sometimes an accomplice - to direct a Stock Exchange operation in Paris and earn money there?

§ 2 Association of capital and intelligence in Stock Exchange operations.
If gambling is the natural condition of the producer and the trader; if, on the other hand, it is permitted for the speculator to use the advantage of his capital on the Stock Exchange,

the superiority of combinations that are inaccessible to others, the priority of information, will it be forbidden to associate, against common risks, those irresistible powers, capital and talent, as Fourier said.

No, certainly not: we are always in terms of legal probity.

Above the gamblers, big and small, agiotant from day to day, - who with the greater or lesser probability of an agio on top of the interest on his funds, who with the filial certainty of his loss, - rise the man with millions and the man with ideas, the Jewish Shylock and the industrious Figaro, those whom the union of their fortune and their genius places at the head of speculation. For, as we have said, the speculative world forms a complete society, having, as in commerce and industry, its high finance, its bourgeoisie and its proletariat. Needless to say, the distribution of profits and burdens is no other than in the field of labour.

Shylock is of plebeian origin. The source of his fortune is some public calamity. Supplier, spy, servant, betrayer of all causes at once, he grew up amidst the distress of his citizens; he rose over corpses.

"English adventurers in the Orient Indies had made prodigious sums of money in a few short months. Returning to the metropolis, they built magnificent houses where splendour too often took the place of taste; they increased the price of all articles of consumption. In front of them, they were saluted to the ground; behind them, everyone trembled. Appalling stories were told of them, and the peasant, at once malicious and fearful, shuddered with all his limbs as the passage of the heavy carriage filled with these men, who had acquired their wealth only by trampling the laws of humanity underfoot. Not more than twenty years ago, the author of this book was told that this work of Lord Clive had a box under his bed in which were piled all the evidence of his crimes, and that he had only committed suicide because his conscience would no longer allow him to bear the overwhelming memory."

"The son of a boatman, forced, in his youth, to dine on the end of a counter, with a newspaper for a tablecloth, Thomas Guy left no less than 12 and a half million francs at his death (1724). His first operations were carried out on the bonds with which sailors were paid in the time of Charles II. After several years of cruel hardship and even greater toil, the defenders of their country received their pay in paper, non-redeemable at the will of the bearers. Sailors, all too often short-sighted, were forced to surrender their uncertain pay to usurers, who discounted it at a rate determined solely by their conscience. Men who had been around the world, like Drake, or who had fought hand-to-hand with Tromp, were largely unable to combat the shrewd agents of the usurers who lured them into the ignoble dens of Rotherhithe, and bought their bonds at the lowest possible price. It was thus that excellent sailors, the glory of the English navy, were robbed, ruined and forced to take their services to foreign nations. It was the purchase of these bonds that Thomas Guy focused on first, and it was on the prejudice caused to our brave sailors that he began to establish the basis of his immense fortune.

"He died at the age of eighty-one, leaving by his testament 240,000 pounds sterling (6 million fr.) to the hospital that bears his name. His body, which rested in the chapel of the Merciers, was transferred with great pomp to St. Thomas's Hospital, and on February 13, 1734, ten years after his death, a statue was erected to his memory in the courtyard of this hospice, which he had edified with the pay so painfully earned by English sailors." (London Stock Exchange.)

Shylock is naturally the contractor of concessions, the successful bidder for loans, the patron of everything that offers big profits. His role is not difficult, for, as the proverb says, the water always flows to the river. If he decides to speculate in commodities, it's not unless he monopolises an entire nature of products: yesterday mercury, linen; today copper, three-six; tomorrow lead, sugars.

The government decrees a 3 0/0 loan and calls on capitalists to bid. Shylock was present; he became the successful bidder at a rate of 75 fr. 25 c. That same day, the 3 0/0 rose to 77. He sold the speculators his privilege of paying the loan, and without taking anything out of his coffers other than the bond for which he was paid interest, he earned 15 million in a few hours.

Full of solicitude for his country, one day he offers to the State to build at his own expense, in return for a 99-year concession, pecuniary indemnity and guaranteed interest, a railway "which the needs of commerce imperiously demand." The State, the protector of commerce, was quick to seize such a wonderful opportunity and grant Shylock the privilege which he had solicited: "the privilege of ruining himself," cried the Jeremiahs, charged with proving to the public that Shylock had no other motive than an ardent love of humanity. Shortly afterwards, the Jew, finding the matter thoroughly good, and "eager of making the profits accessible to everyone,” forms a Company to which he sells, in return for a number of shares and a perpetual deduction from the net proceeds before any distribution to shareholders, his right to build and operate a railroad in the interests of commerce.

The plutocrat has no need to look for companies; they come to him by themselves. The public doesn't want any speculation that does not recommend itself with a well-known name. How many of these high barons of limited partnerships are there, who make their honourability a profession and a commodity, and who, after appearing for a moment on the lists of founders and first shareholders, hasten, once the company has been established, to cash their bonuses, to go elsewhere to trade in their patronage? half a cent at most for the whole of France!

And the public cried out, and the government repeated after: "There is congestion and suffering; the place is overcrowded, the public saturated; there is no more cash, paper is flooding us. Until further notice, the government will make no new concessions, authorise no share issues, or approve the statutes of any limited company. It will even do more: it will restrict, through the hindrance of its laws and regulations, the limited partnership itself.

Imbeciles! your ecus have sunk into Shylock's cashbox, from where they will only come out to favour your carryovers, accelerate your ruin, repurchase your shares at a low price, even if it means returning to the masses with little noise, as the water from the springs returns to them in the form of rain.

The man of ideas is Panurge, Scapin, Figaro turned speculator. He has an elastic conscience and a mocking spirit. He knows all the resources of demands and canard. He's as happy with success in wit as he is with the profits from his mystifications. He is a master in the art of making the premium. Listen to this apologue:

A certain adventurer in an African city, in search of an idea, like so many others, rises one day all radiant, and striking his forehead: - I've found it, I've found it! he cries out like Archimedes. He brushes his shabby suit, polishes his valve boots, puts on white linen and sets off to see the governor. Moral concerns have brought him near the authorities," he says. The honest inhabitants of the city are outraged by the audacity with which prostitution is spread. He's not afraid of being contradicted by his fellow citizens when he asks that a decree quickly relegate the bawdy houses to a certain isolated, almost deserted neighbourhood, where the scandal will have no witnesses. The civil servant, family patriarch and moral guardian, speculator as well, promises to take care of the matter as soon as possible.

Our man runs to a banker. - I need a guarantor," he says, "I'm not asking for money. And he explains to the financier his approach in the interest of morals. - This is pure gold," replies the latter. Attention!

The three powers working in concert - the administration, speculation and the bank - on the day the purifying edict was issued, our adventurer found himself the leaseholder of the entire street assigned to girls' houses.

Ignoble, you may say, in both invention as in style. - Indeed! candid reader, we could attach a proper, glorious name to the yoke of this truthful history. We know the banker who provided the guarantee and received, for his share of the profit, 9,000 fr. It was he himself who told us the anecdote.

Here's yet another one, of which we can guarantee the authenticity.

- What are you thinking, my dear, of leasing at such a high price a road that does not cover its costs?

The questioned man laughed under his breath. - It may be a bad deal, he replied, but I'll take the risks.

After a while, the extension of the railway in question gave the head of the line a considerable importance; the necessities of the service demanded the cassation of the lease. Our farmer invokes the respect of agreements. However, in the public interest, he agrees to make a sacrifice. The lease was annulled in return for compensation of two million.

- If only I'd had that idea! cried the speculators with admiration.

Coulissiers, their noses to the wind and their ears to the lookout, have seen several bigwigs in conference and talk with a discreet tune. - There's news, they think. And they're off in quest of the mystery, each to his own. Happy is the one who first discovers the pot of roses!

The news, which only asks to be discovered, soon becomes the secret of Polichinelle. Only each investigator, convinced that he alone has knowledge of it, operates with confidence. There are two or three hundreds of them in the same matter, and seeing the unanimity of their tendencies, they begin to suspect the truth. Shylock and Figaro needed to produce either an increase or a decrease; the coulissiers have fallen fully into the trap. By the current end of the term, they will pay or be executed without remission.

There is chatter about a merger of companies, an increase in concessions. - Good! the shares will rise; it's a case of playing to the increase; only let's wait for the news to take consistency.

One day, the rise is characterised very clearly; it's time to buy; the symptom is decisive, the merger is certain. And the purchase requests pour in and drive up the price of the shares. Finally, the big day arrives: the merger is no longer a hypothesis, it's a fait accompli, official. The great liquidation! But now the shares remain stagnant; they're even trending downwards. Poor dupes! The deal was discounted when you decided to speculate.

"The first political mystification of which memory was kept at the Stock Exchange took place under Queen Anne. One fine day, a well-dressed man appeared on the royal road, galloping at full speed. Prodigal with his mount and spurs, he had all the barriers opened in front of him, and loudly announced the Queen's sudden death. The news flew from east to west, from south to north. Swift as a will-o'-the-wisp, it reached the city, crossing the solitudes where so many palaces now stand. Funds fell with a rapidity proportionate to the importance of the news."

"Of all the false news, none was more frequently widespread or more favourably received than that of Napoleon's death. There was, amongst others, one occasion on which this rumour was universally accredited. Lord Grandville received a message announcing it and specifying all the circumstances. There were no doubts, funds rose, and the news spread everywhere. The story put into circulation had a certain romantic character entirely in harmony with the acts in the life of the hero whose end it revealed. It was said that Napoleon, having convened a council of war to which he had called one of the desert chiefs, who had shown him some attachment only to better assure his vengeance, this barbarian had assassinated him in full council.

" It is worthy of remark that this fraudulent invention was not imputed to the people of the Stock Exchange, but to two state speculators, assisted by members of the House of Commons. Although the regulars of the Exchange were innocent of this deception, they nonetheless bore the consequences that resulted from the fluctuation of funds, and several were ruined by the ingenious kindness indulged in by the state speculators and the members of the Lower House." (London Stock Exchange, passim.)

Who does not remember the famous message from Tartar on the capture of Sevastopol! The sovereigns congratulated each other; the whole of Europe was deceived for twenty-four hours.

When Shylock and Figaro coalesce in a matter, you can expect a complete sweep.

"The capital of a mining company was divided between fifty owners, who deployed, in their warnings to the public, all that is most ignoble in the art of puffing. They announced that the most ordinary utensils used by the peasants of the area were made of silver. There were only 99 open mines throughout the district, and the company proclaimed that it had bought 360 of them. Another boldly claimed that in a country with no more than five thousand inhabitants, it owned 3,000 mines; and although the existing ones had been abandoned after a loss of 170,000 pounds sterling (4,250,000 fr.), they were nevertheless bought at a very high price. Thanks to this puff, the shares reached an enormous premium.

"Another mining company distinguished itself by the magnanimity of its sentiments. Its rules stated that none of its directors could be the owner of more than 200 shares; that all others would be loyally placed at the public's disposal, and that the strictest probity would dominate all transactions. Unfortunately, all these noble sentiments weakened as the company's power grew. Thousands of shares were divided among the administrators and carefully put under lock and key. A deliberation was passed exempting the company's directors and agents from making payments. After which, they entrusted the most respectable brokers on the Stock Exchange with the purchase of a thousand shares, which were paid for with the company's money. It resulted in a rise in the place, as a result of which they were able to sell all their shares at a premium. It was the same person who had sold the mines to the company who was in charge for providing information on their value. Although the mines were worth nothing, this accomplice didn't fail to make the most flattering descriptions of them. A mine not worth 10,000 fr. was bought for 275,000, and others were paid for at 3,025,000 fr. and found to be almost completely depleted.” (London Stock Exchange, passim)

In the shadow of these two powers, Fortune and Charlatanism, the common martyr loses or wins, depending on the odds. Thus a constant concert of murmurs and praises, in which each to his devotion exalts or curses the kings of agio. What does it matter to them? They can't hear what's being said below. Besides, won't today's malcontents be tomorrow's satisfied?

A man thinks he's clever because he's made a few good moves. By chance, he operated in the same vein as Shylock and Figaro; that's why he succeeded.

The big ones only associate with each other. Since every gain between gamblers and crooks supposes a loss, it must be someone who pays. That someone will not be the high underworld!

She certainly has her protégés. How can one refuse to warn one's doorman, one's servant, one's shoeshiner, one's friends, one's mistresses, one's doctor, one's journalist, one's boarders, one's impoverished, of the favourable moment? devoted clients whose zeal it is good to maintain, and who render so many services by their chatter!... We find an example of this in the Almanach of the Stock Exchange for 1857, an example too innocent for us to deprive ourselves of the pleasure of reporting it in our turn.

"It was only after the death of M. Laffitte, and then only through the noble indiscretion of his associates, that the many misfortunes that he helped in the shadows became known. Mr. Mirès closely follows this tradition. So many writers were pleasantly surprised to receive through the post this rich piece of news:

"Sir, I have the honour of informing you that I have granted you... shares in a company of..., and that I have sold them in accordance with your orders. Please, therefore, proceed to my cash desk to receive your profits, which amount to..."

"A host of traits of such good taste have assured M. Mirès so many devoted friends in the press and in the arts, that their gratitude imposes silence on the clamours of envy."

When Mr. Mirès, who today defends the austere financier with such comical dignity against the needy speculator, makes such mailings to the people of letters who cultivate his intimacy, is he giving them a lesson in morality, disinterestedness and civic virtue from which to learn? Is he, the entrepreneur of so many sponsorships, good and bad, in a position to justify his conduct? How could he! the promoter, entrepreneur, director and principal limited partner of a limited stock company, and when these shares, heated up by your newspapers, offer a 50-fr. premium, you allow yourself to sell them!

So you are not an entrepreneur!

You are not a serious sponsor!

And as a director and administrator of the company, you're failing in your duty.

Now, since you're no longer needy, and it's impossible to recognize in you the honest, austere financier you recommend, for another time, to the dramatic justice of M. Dumas, what are you then, Mr. Mirès?

The conclusion is clear. For the great artists of the Stock Exchange, like those of the Opera, must have a clique and a claque to silence the critics and put the speculators in heat; and the author of the anecdote, Mr. P. de F., could have done his job a little less foolishly. But once the play was performed, to hell with philanthropy: if you had to maintain all the minnows, where would the profit be? There's nothing for the imprudent to hope for in the event of failure, as the popular apologue teaches us.

The Coulisse, having flourished In full security, Found herself destitute
When the decline came.
No money, no more credit,
To pay, no respite.
She went crying out for hunger
At the Bank,
her neighbour,
Begging for a loan
A few sous to speculate with
Until the new rise.
- I'll repay you, she said,
End of next term, legal delay
Interest and principal.
The Bank is not a lender:
That's the least of its defects.
- What were you doing in times of plenty?
She says to this borrower.
- Every day, to all comers
I was buying, without displeasing you.
- You bought, I'm glad to hear;
Well, sell now.