To start with, the stockjobber does not deal with the public, but the stockbroker does.
You see stocks and shares are marketable commodities; you can buy them, sell them, or transfer them, and the stockjobber is, as it were, the wholesale merchant, and the stockbroker the retail dealer. Let me explain. If you required twenty yards of black silk, you would probably go to Marshall and Snelgrove or to Peter Robinson for it. You certainly would not think of going to a wholesale house in the City for it; and if you did, the article would not be supplied to you in this way—it is contrary to the etiquette of trade.
Just in the same manner, if you wanted to buy some stock, you would go to a stockbroker for it, and not to a stockjobber—the stockbroker occupying the same position as Marshall and Snelgrove, while the stockjobber stands in the place of the wholesale house in the City.
The stockjobber, or wholesale merchant, is always ready both to buy and sell with the broker. If you give an order to the latter, he darts into the Stock Exchange, and without disclosing the nature of his order to the jobber, inquires of him the price of the particular stock which you wish to deal in. The jobber names two prices: one at which he is prepared to buy (the lowest price, of course), the other at which he is willing to sell (the highest price).
Thus, if the price of Consols was given by him as 100¼ to 100½, it would mean that if you wanted him to take some stock of you he would give you £100 5s. for each £100 of stock; and that if you desired to buy some stock of him, you must pay him £100 10s. for each £100.
These prices are the limits which the jobber sets himself. He is often ready to give more or to sell for less than the prices he at first names, according to what is known as the state of the market.
The profits of the jobber and the broker are not of the same kind; the jobber makes his money out of the difference between the price at which he buys the stock of you and sells it to someone else.
The broker charges you a small percentage on the cost of the stock by way of commission for his services in the matter; this does not include stamp duty or fee, but otherwise he undertakes any incidental service which may be necessary to give you the full proprietorship of the stock.
Stockjobbers, or wholesale stock merchants, are, as you see, very necessary, for brokers could not at all times accommodate their customers; it might be that one would want to sell at a moment when there was no one to buy; as it is, however, all is made easy by the jobbers, who are at all times ready both to buy and sell, and to almost any amount.
It does sometimes happen that they promise to sell more than they possess, and then they have to borrow and pay for the use of it on their clearing day, which takes place once a month for Consols and similar securities, and once a fortnight for other stocks within the Exchange. It would never do for members of the Stock Exchange to fall short of their obligations.