William C. Van Antwerp
The Stock Exchange from Within
Published by Good Press, 2019
EAN 4057664174208
Table of Contents
CHAPTER I THE FUNCTIONS OF THE STOCK EXCHANGE
CHAPTER II THE USES AND ABUSES OF SPECULATION
CHAPTER III THE BEAR AND SHORT SELLING
CHAPTER IV THE RELATIONSHIP BETWEEN THE BANKS AND THE STOCK EXCHANGE
CHAPTER V PUBLICITY IN EXCHANGE AFFAIRS; CAUTIONS AND PRECAUTIONS
CHAPTER VI PANICS, AND THE CRISIS OF 1907
CHAPTER VII A BRIEF HISTORY OF LEGISLATIVE ATTEMPTS TO RESTRAIN OR SUPPRESS SPECULATION
CHAPTER VIII THE DAY ON ’CHANGE, WITH SUGGESTIONS FOR BEGINNERS
CHAPTER IX THE LONDON STOCK EXCHANGE, AND COMPARISONS WITH ITS NEW YORK PROTOTYPE
CHAPTER X THE PARIS BOURSE; A MONOPOLY UNDER GOVERNMENT
APPENDIX REPORT OF THE GOVERNOR’S COMMITTEE ON SPECULATION IN SECURITIES AND COMMODITIES 1909
THE CONSOLIDATED STOCK EXCHANGE
CHAPTER I
THE FUNCTIONS OF THE STOCK EXCHANGE
Every now and then some one who has not given much thought to the matter asks the questions, “Of what real use is the Stock Exchange?” “What does it accomplish?” “Is it a necessary and useful part of our economic life, or is it merely a means of promoting speculation and gambling?” These are fair questions, and they are asked in good faith. To be sure they have been answered many times by writers on economic subjects, but the trouble is that in our hurried American life we do not read the economists, preferring to get our impressions from the hasty utterances of some one who knows no more about it than we do.
The study of any form of economic development, like the study of sciences and philosophies, requires infinite patience. But the “man in the street” is bored to death by such methods; he wants to take a short cut to his conclusions; merely tasting the Pierian spring he hurries on to judgments that are superficial, haphazard, and often crude and blundering. And yet at bottom this man, a good citizen with an open mind, invariably wants the truth. He may be too busy to dig it up himself, but he knows it when he sees it, and once he has grasped it he has no patience with those who seek to turn him from it. To this average man, who holds in his hands the balance of power in America, I venture to say something about markets.
The first thing a man asks when he wishes to buy is “the price.” Every minute of the day, all over the world, that question is on men’s lips. As it is a necessary prelude to all forms of trade, it follows that everything that enters into the making of prices becomes at once of primary importance. The more scientific the price, and the nicer and more accurate the making of it, the better the bargain for both buyer and seller and for trade generally, bearing in mind the distinction between prices, which are temporary and move rapidly—and values, which are intrinsic and move slowly. The price of a thing is what you can get for it; the value is its real worth to you, and hence it cannot be defined or measured, since a thousand considerations may enter into it, such as caprice, sentiment or association. If real values could be determined, they would necessarily be identical with prices, but as they cannot be ascertained in ordinary commodities of trade, prices become the really essential considerations and values the subordinate ones. Let us see, then, how prices are made, for this is one of the reasons why exchanges exist.
If you want to buy, let us say, a piano, you go to the dealer and ask the price, and as he is the only person in the neighborhood who deals in pianos, you must either accept his offer or look elsewhere. But to look elsewhere takes time and labor; dealers in pianos are widely separated; moreover, there is no open competition among them such as you would like, and so finally when you have bought you feel perhaps you have not secured your money’s worth. You would have secured a much better bargain, no doubt, had there been twenty dealers in the room competing with each other, and a still better bargain had their number been fifty, or a hundred, or two hundred, because that would mean competition, and the more competition there is, in close contact and governed by rigid business rules, the more certain the approach to a perfect price. Everywhere in the world fairs and other gatherings of merchants are held at periodic intervals because people demand them in their effort to secure proper prices by competitive bidding and offering. One of the first travelers to penetrate the heart of Africa found among the natives this phenomenon of trade, showing that it is instinctive; indeed, it may be traced to the earliest known period in the history of any people. If you arise before daybreak in London and go to Billingsgate and Covent Garden, or in Paris to the Halles Centrales—Zola’s “Ventre