The special settlement is a necessary preliminary to official quotation, the formalities in connection with which are explained in a subsequent chapter. As will be seen, only a small proportion of the securities in which transactions occur are officially quoted, but no official quotation is granted until after the special settlement has taken place.
In the discussion of the settlement, mention has been made of those who do not desire to settle as the time comes round. These are mainly Bulls and Bears. To use the time-honoured definition, the Bull is one who buys what he does not want, and the Bear is one who sells what he has not got. The terms were used in their Stock Exchange sense long before the Stock Exchange came into existence--a hundred years before, in fact. At all events, they were in full use when the eighteenth century was in its teens, when dealers in stocks and shares were wandering homelessly about Change Alley. This is shown by the literature of the time. And soon after the middle of the eighteenth century we find Horace Walpole writing to ask a political friend if he knew what a Bull and a Bear and a Lame Duck were. "Nay, nor I either," wrote Walpole, anticipating the answer, "I am only certain they are neither animal nor fowl, but are extremely interested in the new subscription."
Walpole seems to have been a little weak in his Stock Exchange zoology. It was more probably the Stag rather than the Bull or the Bear who was interested in the subscription of the Government loan which he had in hand. It is the Stag who applies for an allotment of a promising new loan when it is issued, in order that he may sell it immediately for a profit. The ordinary applicant who is not a Stag applies for it, of course, to keep as an investment When the loan is likely to be in great demand, the Stag frequently applies for an allotment infinitely larger than he could possibly pay for. He assumes, generally correctly, that he will be allotted only a small proportion of his application and, if he can sell at a premium, the more he is allotted the better he likes it. The existence of the Stag explains the apparent anomaly of a steady decline in the price of a loan soon after it is issued, although at the time of issue the demand was enormously in excess of the supply. A loan may be subscribed thirty times over, and yet within a few months of its issue may be bought in the market at a lower price than that at which it was obtainable by subscription. The fall is caused, of course, by the steady selling of the Stags, who created a fictitious demand.