36 THE WORK OF THE STOCK EXCHANGE 
kets, or stock exchanges. As time went on, increasingly strict 
and inclusive rules were adopted to govern the character of 
trading on the exchanges, and also methods were gradually 
established for periodically clearing and settling such exchange 
contracts in the most efficient and economical way. 
Prerequisites for the Creation of Exchanges.—Undoubt- 
edly the organized exchange is the safest, the most democratic 
and the most efficient sort of market known, and represents 
the highest stage which the evolution of markets has thus far 
attained. However, an exchange market cannot be readily 
developed for many commodities or forms of property. Unless 
an article is widely demanded by consumers and produced in 
considerable quantities, there will not be sufficient trading in 
it to justify the creation of an exchange. Moreover, unless 
it can be readily graded and standardized, trading in it must 
usually consist only of small retail transactions, and not whole- 
sale transactions by contract on an exchange. Furthermore, 
many articles, though widely produced and consumed, are too 
perishable to permit of handling through a highly organized 
exchange market. Other factors, too, such as the proportion 
of production or consumption controlled by a single institu- 
tion, etc., also have a vital bearing on whether or not an ex- 
change can be readily established for the given commodity. 
In the gradual and confused process which has attended 
the higher development of markets, therefore, a considerable 
number of articles—and in particular, perishable foodstuffs 
and articles of widely varying quality and relatively small 
demand—have lagged behind, and have either remained in the 
old markets made in the street or else have moved back across 
the sidewalks into the retail stores. Trading in such commodi- 
ties is usually sluggish and speculation in them occurs on too 
narrow and limited a scale to afford the fullest economic benefit 
to the public. In consequence, the risks involved by carrying 
them are considerable and the profit on their occasional sales 
for that reason has to be comparatively large.