BOURSE. - I. The place where securities or goods are traded or may be traded; hence two kinds of b.: b. of securities, where credit instruments are bought and sold (government securities; shares and bonds of industrial, mining, commercial companies, etc.; coins and foreign currencies); b. of goods, where the most important goods are traded (raw materials, wheat, rice, sugar, coffee, etc.).
II. Exchange operations may be:
a) cash contract or forward contract with delivery: the two contracting parties actually exchange securities or goods and price either at the moment of the transaction or at the fixed term; b) differential forward contract: the securities or goods are not delivered and at mid-month or month's end only the difference is paid which in the meantime the price of the security or goods traded has undergone, that is: if at the moment of the conclusion of the contract the price of the security was 100 while at the moment of its expiry it comes to be 101, to the one who has speculated on a rise (bull) the price of 1 for each security is paid by the one who has speculated on a fall (bear); the reverse would happen if at expiry the price had fallen to 99.
c) premium contract: a maximum limit is fixed by the contracting parties in the difference above or below; payment will be made up to that limit when the fluctuation of the price of the security or goods had exceeded it.
d) report contract: one contracting party (the reported) transfers to the other (the reporter) a determined quantity of securities with the express reservation, after a certain time, of being able to repurchase them: the same or an equal number of the same kind.
e) deposit contract: the reverse operation of that described under the preceding letter.
In every b. a price list is displayed where the quotations of the securities or goods are recorded: the opening and closing price; the maximum and minimum price. In the major b. of a country its entire economic life is reflected, and by reflection the pulsations of the economic life of other countries also reach them; whereby they constitute centers of exchange, information and orientation of capital importance.
III. MORALITY
Catholic moral doctrine is certain on this general principle: stock-exchange operations, considered in the essential elements that constitute them, are lawful. For they result from the combination of contracts that are originally lawful: for example, the futures contract with differential settlement reduces to a wager or a game of chance, albeit in the form of a sale; the repurchase agreement combines together, in reverse direction, a sale for cash with another on time, and in cornering there is resolved the whole set of stock-exchange operations tending to concentrate in the hands of one alone or of a few operators all or almost all the securities of a given type. Indeed some authors, against the suspicions of others, proclaim along with the lawfulness also the usefulness of stock-exchange operations for the national economy: "it is in the public interest that there be some who, enticed by the hope of gain, devote themselves to the investigation of these phenomena: thus prices are established with ease and certainty, and the progress of industry and commerce is better provided for" (A. Tanqueray, Synopsis theologiae moralis, III, Rome 1929, p. 465). Therefore stock-exchange operations, lawful in themselves, can become unlawful and unjust only by force of particular circumstances that come to insert themselves among the essential elements of those same operations, corrupting their moral goodness. The principal of such circumstances are the following. The use of means already in themselves unjust or unlawful, in order to bring about prices favorable to one's own gain with or without harm to others: for example, the spreading of secret or false news about the prosperous or bankrupt state of a person or an institution. Even operating on an excessive quantity of securities can give rise to various forms of unlawfulness or injustice. By bringing about artificial prices, beyond the maximum and minimum limits of the just and real price, one can harm private individuals, which is against commutative justice; or, without harming private individuals, the general economy of the nation can be disturbed, which is against social justice: hence the moral obligation to observe the civil laws existing in the matter (A. Vermeersch, Theologiae moralis principia, responsa, consilia, II, 3rd ed., Rome 1937, p. 474). Furthermore, excessive trading on the stock exchange, even without altering the just price, can be unjust toward the counterparty, if it exposes the operator to the danger of insolvency, since he faces risks superior to the capital available; or it can expose to the danger of considerable poverty a flourishing individual or family economic situation: then, even without violating justice, one commits, by an act of imprudence, also a violation of moral duties toward the family or toward oneself. Monopolistic operations in securities are lawful or not, according to the ends to which they are directed. They are lawful and useful, if intended for lawful and useful ends: such as the defense of a security, threatened by crisis or by ill-intentioned or merely imprudent operators; they become unlawful and unjust, if intended for unlawful and unjust ends: such as the bankruptcy of a private person or institution, or the boycotting of their lawful speculations. It is well finally to note that, according to the response of the Holy Office of 15 Apr. 1885, ecclesiastics are obliged "to abstain from every contract that resembles the so-called stock-exchange games."
Both because of the consequences that derive from them and because of the conditions that they presuppose, the difference must be noted between merely moral violations and violations also of justice. Injustice, besides the moral unlawfulness, also engenders the obligation to repair the damages caused to others; not so for the merely moral violation. But for there to be an obligation of restitution, the circumstance that renders the operation unjust must possess these three conditions: it must be truly unjust, that is, harmful to the right of another; it must be effectively unjust, that is, the cause and not merely the occasion of that violation of right; it must be subjectively unjust, supposing in the operator the awareness of such a violation, as produced by his action. If one of these conditions is lacking, the obligation of restitution falls, even though the gravity of the moral violation may still subsist.
On the stock exchange, stockbrokers too, besides the operators, can incur moral faults or injustices. Being specialized intermediaries, their faults, apart from the greater gravity and ease, reduce to the faults common to all intermediaries.