Chapter II: The Period of Suspension (2)

The carrying out of this plan at first met with a technical obstacle. The power to appoint a Special Committee rested exclusively with the Governing Committee of the Exchange; in order to secure action a special meeting of that body would have to be called; in the early weeks of September sentiment was still in so critical a state and every act of the Exchange was so keenly watched that it was feared the holding of an extraordinary meeting might start rumors and cause alarm. In view of these considerations the Committee of Five hit upon the makeshift of inviting three members of the Governing Committee, who possessed the desired qualifications, to volunteer their services as an advisory body in the matter of fixing prices for listed bonds. The three members selected were Messrs. C. M. Newcombe, Vice President of the Exchange, W. H. Remick, and W. D. Wood.

On the 19th of September these three gentlemen cheerfully undertook the difficult and onerous task urged upon them, and for three months they abandoned their own private interests and devoted their entire time to it. Owing to the intelligent and judicious manner in which they handled the delicate problem of conducting a liquidation in listed bonds that should at once be effective and yet not lead to demoralization, they placed themselves among the foremost of those to whom the financial community owes a debt of gratitude.

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By the latter part of September methods, as described above, had been found for facilitating a restricted liquidation of listed stocks, and of listed and unlisted bonds. Nothing, however, had been done to make an outlet for unlisted stocks. The "Curb" market and certain prominent unaffiliated houses dealing in these securities had loyally played their part in suspending dealings, but symptoms began to show themselves of possible revolt, and the Committee of Five set to work to find a safety valve for this department also. The device of a supervisory Committee had proven so efficacious in other directions, that it was naturally turned to in this instance. The circumstances differed, however, in one particular. The bond dealers had spontaneously created for themselves the very efficient Committee of Seven who took their affairs in hand, but the interests involved in unlisted stocks did not show the same solidarity, and it was necessary for the Committee of Five to take a hand in initiating action.

With this end in view they consulted Mr. Herbert B. Smithers, of the firm of F. S. Smithers & Co., concerning the feasibility of having a committee formed to pass upon and control a resumption of dealings in unlisted stocks. Mr. Smithers was singled out for the reason that he was a member of the Stock Exchange whose firm was among the most prominent dealers in these securities, and the prompt and energetic way in which he undertook the task proposed to him soon convinced the Committee that they had not erred in resorting to him. He set about organizing a Committee at once and on September 24th he appeared before the Committee of Five accompanied by Messrs. A. C. Gwynne, F. H. Hatch, A. H. Lockett, and E. K. McCormick. These gentlemen announced that they were willing to act, with Mr. Smithers as their Chairman, and a plan for the control of the market in unlisted stocks was agreed upon.

In order to clothe this Committee (which included two Stock Exchange members, two representatives of prominent outside dealers, and the President of the Curb Association) with authority, the Committee of Five directed members of the Exchange to submit proposed dealings in unlisted stocks to them and abide by their rulings. The Stock Exchange Committee could, of course, only control its own members, but it being a fact that a very large part of the unlisted business emanated from Stock Exchange houses, it was probable that their action would determine that of unattached dealers. This expectation was, in the main, borne out, and business in unlisted stocks began to be carried on actively under the jurisdiction above described.

It is necessary to record, however, in the interest of preserving a correct picture of the happenings of this momentous time, that the smooth and gratifying operation of the various other Committees, which sprang into being to handle the numerous problems presented, was not entirely repeated in this case.

The conditions surrounding unlisted stocks seemed on the surface to be identical with those pertaining to unlisted bonds. In both cases a business that was partly in the hands of Stock Exchange members and partly in those of outside concerns was to be presided over by a mixed Committee representing both interests. In the case of the Bond Committee of Seven this supervision was accepted and cheerfully lived up to by practically all concerned. A different situation soon developed in unlisted stocks. Almost immediately certain individuals in the business began to assert that the unlisted Committee was a self appointed body which did not represent the people most concerned, and that being themselves dealers in the properties the trades in which were under their supervision, these gentlemen could not be trusted to act fairly in making their rulings. After much preliminary growling which vented itself in interviews with the Committee of Five, this antagonistic sentiment crystallized into a written protest.

On October 1st, the following statement was presented to the Committee of Five.

"GENTLEMEN:

"Owing to a general feeling of dissatisfaction amongst members
and non-members of the New York Stock Exchange resulting from the
formation of a Committee of Five to supervise dealings in
Unlisted Securities, we, the undersigned, desire to suggest the
following recommendations for your consideration:

"_First_: The personnel of the Committee be changed to the effect
that same be composed of parties not identified as dealers.

"_Second_: That in stocks which have an open or active market,
transactions may be made without restriction or necessity of
report to the Committee, when at or above the closing prices of
July 30, 1914.

"_Third_: That where securities have not had an active or open
market the bid prices as published in the _Chronicle_ of August
1st, be accepted as the closing prices.

"_Fourth_: That in the case of securities where the Committee may
deem it possible to trade at prices below those prevailing on
July 30th, they establish minimum prices good for as long a time
as the Committee deems practical, and that a list of these prices
be furnished to those making application for same."

"We think that if the above recommendations are put into force,
it will do away with the criticism which has been made as to the
Committee as at present constituted, and by so doing increase the
efficiency of this Committee on Unlisted Securities, by securing
thorough and hearty coöperation on the part of all brokers and
dealers in these issues."

In reply to this appeal the Committee of Five pointed out that whenever, in other cases, the action of a Committee had been invoked to supervise the transaction of business, confidence in the integrity of that Committee had been general and unquestioned. The Committee of Seven, the Committee on Clearing House, the Committee of Three, and the Committee of Five themselves had all been vested with dictatorial powers over a business in which their members were personally engaged. In order to render trading in unlisted stocks a possibility, at the time, similar powers must be granted and similar confidence must be given to some one. The Unlisted Stock Committee were not self-appointed because they came into being at the instigation and suggestion of the Committee of Five, and to disband them after they had started upon their work, substituting other individuals in their places, would merely stimulate fresh antagonism that might wreck the entire project. The fact that these men were dealers in outside properties especially fitted them to pass upon the reasonableness of the prices that were to be made, and there was no more reason to question their integrity of purpose than there would be to doubt that of any individuals who might take their place.

A firm stand was thus taken in defence of this new Committee, and they succeeded in carrying on their work successfully up to the time when the amelioration of conditions enabled them to disband. It must be regretfully recorded, however, that the petty jealousy and distrust which had appeared in connection with this episode continued to show themselves in a desultory way until the end. A few individuals threw what impediments they could in the path of this Committee, and thereby furnished the only exception to the wonderful exhibition of loyalty and self effacement that manifested itself in every other department.

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When the Exchange suddenly closed its doors, an immense number of people, consisting of employees of the Exchange itself and the clerical forces of all the many brokerage houses, were rendered idle. As soon as it became evident that the suspension of business was going to be indefinitely prolonged, the grave question arose as to the extent to which these people would be thrown out of employment. The Stock Exchange at once set the generous example of deciding to retain its entire force without reduction of wages, and this decision was carried through for the entire four and one half months of suspension. A more difficult problem, however, confronted the brokerage houses. Many of these firms had very heavy office rents and fixed charges of various kinds; their business had been showing meager profits and even losses for some years and, the length of the period of closing being impossible to forecast, they did not dare to undertake burdens that might get them into difficulties. The result was that a few strong houses, with philanthropic proclivities, carried their clerical forces through on full pay, but the majority were obliged to cut them down in various ways. In some cases the full force was retained on greatly reduced salaries, in others salaries were reduced and part of the force discharged, and the net result was that a great number of unfortunates were either thrown into unemployment altogether or placed in very straightened circumstances.

It is an interesting fact, bearing on the popular superstition that Wall Street is peopled by unprincipled worshippers of the dollar who are incapable of those finer qualities of character which are confined exclusively to other walks of life, that there is no region in which a quicker response to the call of the needy can be obtained than on the floor of the Stock Exchange. Even though the brokers were facing an indefinite period of starvation themselves, with expenses running on one side and receipts cut off on the other, the moment it became clear that severe suffering had come upon the clerical forces of the Street a movement was at once set on foot to start measures of relief and assistance. Perhaps the best way to convey an idea of the form which this assistance took is to quote from a report on the subject made by one of those who generously gave his time to the work. What follows is in his own words.

"A phase of the extraordinary and unprecedented conditions prevailing in the Financial District, commonly known as 'Wall Street,' was the necessity for cutting down office expenses, and though many firms carried their salary list intact, a considerable number laid off from one half to two thirds of their employees, and subsequent events developed the fact that some of them discharged practically their entire force.

"About the middle of September, the distress said to exist among the Wall Street employees, who had lost their positions as a result of the war in Europe, prompted Mr. C. E. Knoblauch to suggest that some concerted action be taken to meet this emergency, if only as a temporary expedient. A number of informal discussions of the subject with fellow members of the Exchange, and further evidences of the existence of a wider field for the work than was at first realized, culminated in a call for a meeting in the office of Tefft & Company and immediate organization.

"Officers having been duly elected, the personnel of the Committee was declared to be as follows:--James B. Mabon, W. H. Remick, Graham F. Blandy, R. H. Thomas, W. W. Price, G. V. Hollins, C. E. Knoblauch, C. J. Housman, G. M. Sidenberg, Townsend Lawrence, T. F. Wilcox, Erastus T. Tefft, Chairman; Charles L. Burnham, Secretary; Edward Roesler, Treasurer.

"The title of the Committee was formally agreed upon as 'The Wall Street Employees' Relief Committee.'

"Through the courtesy of Mr. Clarence Mackey, the offer of a suite of rooms on the second floor of the Commercial Cable Building, 20 Broad Street, for the use of the Committee, at no charge for rent, was gratefully accepted, and arrangements for occupation were made at once. Mr. Oswald Villard, through a member of the Committee, evidenced his interest by offering temporary use of rooms in the _Evening Post_ Building for the purposes of the Committee.

"It was determined that the principal object of the Committee would be to act as an Employment Bureau, to find positions for unemployed and to relieve distress where it was found to exist. It was understood and arranged for, that any Wall Street employee who had lost a position as a result of the war was eligible, and that no fees whatever be charged. A circular letter was sent to Stock Exchange members and firms appealing for subscriptions, and the matter of selection of a depository of the funds was referred to the Treasurer with power. The work of receiving and recording registration blanks commenced with a rush, over one hundred and fifty were filed the first day, and in a few weeks they numbered over one thousand.

"A very pleasant feature of the work was the cordial coöperation encountered on all sides. Helping hands were extended everywhere. The newspapers gave many 'reading notices,' and special advertising rates, and the news bureaus printed any and all notices as and when requested. The Stock Exchange Library Committee and the Secretary's Office placed their typewriting, multigraph and circular printing facilities at the Committee's disposal, furnished the rooms with desks, chairs, etc., and supplied all necessary stationery. The Stock Exchange force of telegraphers and other employees practically in a body volunteered their services, and those selected were of great assistance in preparing the card index system, which was used and found to be practical and eminently satisfactory. Appreciated assistance was promptly tendered by The Telephone Clerks' Association, The Association of Wall Street Employees, and The Wall Street Telegraphers' Association.

"Several cases of sickness, some very serious, were taken care of by Dr. L. A. Dessar, who gave free medical service to all applicants recommended by the Committee, and provided hospital treatment when required. The declarations made by the applicants demonstrated beyond any question that the number of men, women, girls and boys for whom prompt assistance in procuring employment was imperatively necessary had been greatly under-estimated, and evidenced an absolute argument endorsing the reasons for the Committee's existence.

"Many who applied were not in immediate need of money, but wanted employment, which the members of the Committee sought for them by individual solicitation of everyone they knew, or knew of, who were employers, and also by careful, judicious and timely advertising in the daily papers. Such satisfactory results were attained, that up to date of this writing, (May 15, 1915), of over seventeen hundred applications received, permanent positions were secured for about seven hundred at rates of compensation that were distinctly gratifying, all conditions considered. Two hundred and thirty were placed in temporary jobs for periods ranging from a few days to several weeks, a number of them being re-employed two or three times. Four hundred and ninety, having been taken back by their former employers, withdrew their applications.

"Numerous positions obtained for applicants while the Exchange was closed were in lines other than Stock Exchange business, and Wall Street clerks notwithstanding their recognized efficiency being, so to speak, specially trained, it was often found to be difficult, even impossible to make them fit the kind of work to which they were more or less strangers. In view of the fact that this circumstance made the accomplishment desired necessarily slow, the outcome demonstrated that it was reasonably sure.

"The request for subscriptions to the fund met with a hearty and generous response. Some apprehension was felt in this regard, but the splendid result proved to be an agreeable surprise. Appeals for subscriptions to the fund were made only to Stock Exchange members and firms, nevertheless, thanks to the general interest manifested, and the widespread advertising consequent thereto, contributions were received from generous friends outside of Wall Street, to an extent that was simply astonishing. Checks for $1,000 each were not unusual items, and as a rule the request was made, 'please do not publish my name.' A well known artist, in addition to a cash subscription, presented one of his paintings to the Committee. Through the kind assistance of the Chairman of The Stock Exchange Luncheon Club, the picture was sold for the substantial sum of $500.

"The Treasurer, with ample funds at his disposal, was able to meet calls for financial help that were frequent and pressing, and recognizing the desirability of experienced and competent assistance in making the necessarily intimate inquiries, to determine if applicants for relief were worthy, he applied to Mr. Robert W. DeForest, President of The Charity Organization Society, for expert advice in the matter, and was referred by Mr. DeForest to Mr. Frank Persons, Manager of the New York Bureau, and Miss Byington, in charge of the Brooklyn Branch, who rendered invaluable services in connection with many of the applications, all of which were carefully investigated. Much suffering and distress, and some cases of actual destitution were found to exist, and while a detailed statistical statement would seem uncalled for and not desired at this time, the following brief résumé of the Committee's 'relief work' will undoubtedly prove to be of interest.

"Financial assistance was extended to about one hundred individuals and families; rent was paid for thirty-nine; food purchased for forty-six; clothing was furnished in seven instances; five persons were placed in hospitals; there were a considerable number of cases where the Committee in whole or in part took care of funeral expenses; old debts for medical attendance and drugs; agency fees and surety bonds; life insurance premiums, board and lodging, etc., etc. Many applicants for assistance proved to be merely temporarily embarrassed, they were willing and anxious to be helped but did not want charity, so to meet that emergency a form of voucher was used, which acknowledged the receipt of a 'loan' without interest, to be repaid at the convenience of the 'borrower.' That applied to _cash_ of course, payments for groceries, rent, etc., were simply receipted for.

"The results achieved, in the opinion of many, would seem to warrant an amendment to the original idea that a return to normal conditions would involve the dissolution of the Committee, and the proposition that it be made a permanent organization is being seriously considered."

This record is deeply gratifying to the brokerage fraternity because it discloses the fact that, even in the midst of a calamity so great that no individual could feel himself beyond the reach of insolvency, the impulse to succor the unfortunate remained as strong as ever among them.