RISE OF THE NEW YORK STOCK EXCHANGE 81 
was when the only mechanical appliance in the New York 
stock market was the old buttonwood tree—and some skeptical 
modern historians have even claimed that this had been previ- 
ously chopped down in the Revolution by British soldiers, and 
that only its stump remained when the original securities market 
congregated nearby it! 
In all stock exchanges, two chief functions of members are 
clearly distinguished—brokerage and trading. The broker 
executes orders to purchase or sell securities simply as an agent 
for someone else, on a fixed commission. The dealer or trader, 
on the other hand, has no customers and acts as nobody’s agent 
but his own—that is to say, he buys and sells securities entirely 
for himself and “on his own account.” Brokers make their 
livelihood out of the commissions paid to them by the pur- 
chasers and sellers whom they represent, but cannot make a 
profit out of any difference between buying and selling prices. 
Dealers and traders depend entirely upon profits in trading, 
and cannot receive commissions. 
Different stock exchanges regulate the extent to which their 
members can exercise these two functions in different ways. 
The Compagnie des Agents de Change—the official brokerage 
organization in Paris—forbids any of its members on the 
Paris Bourse to act as dealers at all.’ The Stock Exchange of 
London divides its membership into brokers and “ jobbers” or 
dealers, and compels each member to be consistently either the 
one or the other. The New York Stock Exchange allows a 
member to act either as a broker or a dealer as he will, as long 
as he does not attempt to act in both capacities in the same 
transaction. Each of these systems can no doubt be defended 
in its own particular milieu, but there is little doubt that the 
American system is the most flexible and the least artificially 
constrained. Also, in practice, most members of the New 
York Stock Exchange tend to specialize in one class of dealing 
or brokerage through the great difficulty in one person’s ade- 
© 1 See Appendix VIIIa.