Chapter XV: Appendix: Report (3)

The same thing happened in the case of the old St. Paul 7’s, which were convertible into preferred stock. Bondholders allowed themselves to be paid off at par for a bond which had been standing at 170 and apparently had never read the terms of their own mortgage. What can the law, the press, or the banker do against such criminal negligence as this? And if bondholders are remiss, what shall be said of the average stockholder? He is improving undoubtedly, but he has still a great deal to learn. His right to information is unquestionable, but he fails to exercise it in anything like the degree he should. It is to be feared also that he does not take a great deal of trouble in learning to analyze such reports and balance sheets as may be submitted to him.

A stockholder should never hesitate to write to the officers of his company for information. He should do it often, and he should get other stockholders to do the same thing. One stockholder writing frequently may be regarded as a nuisance. Ten will be treated with respect, and it will be a very autocratic control which will venture to deny information to a hundred stockholders, taking a legitimate step to protect their own proper interests. The newspapers are glad to furnish any information in their power, but if the stockholder would write to the company first and the newspaper afterward, he would probably derive more ultimate advantage.--_Wall Street Journal_, September 22, 1909.

[55] Address by President Finlay of the Southern Railway, before the Transportation Club of Indianapolis, October, 1912.

[56] “If there is one man who really understands the nature of the transactions in the New York Stock Exchange from day to day, it is Robert L. Doremus, the chairman of the Stock Exchange Clearing House Committee, which has the power to lay bare the character of any broker’s business. His reputation for veracity is of that high character which Wall Street demands from the men in its responsible positions. When he says that the main influence in any day’s trading is a legitimate and widespread demand for sound securities, in lots small enough to be within reach of the investor of moderate means, he is talking facts and not theories.

“Our politicians, however, are legislating for a Wall Street of twenty years ago. The stock market is not controlled by large speculators creating deceptive prices by manipulative orders. That kind of business is passing away, and it may be said that another kind, that of the purely gambling accounts carried on the lightest of margins, has practically gone, and is not likely to return. The few houses whose business is still of this character are dying of dry-rot; while the active houses who are doing the real business of the stock market report their speculative accounts so broadly margined as to be of a semi-investment character.

“What is still more satisfactory is the wide diffusion in the ownership of industrial and railroad stocks. This is not new. The Illinois Central’s great strength for forty years was in the small stockholder, who made his voice heard to some purpose when “strike” legislation developed in his State legislature or in Congress. But the ever-widening character of the investment area, the recognition of the convenience and convertibility of Stock Exchange securities, safeguarded by sound management and full publicity, is a growth of the most hopeful character. It indicates a force of enlightened conservatism of the greatest value to the country.”--The _Wall Street Journal_, October 22, 1912.

[57] It is truthfully declared by Courtois, in his _Traité des Opérations de Bourse et de Change_, that a fictitious movement, even on the part of the most powerful operators, cannot overcome the natural tendencies of values, and that the most that can be accomplished is sometimes to hasten or retard slightly the certain effect of a foreseen event. “Wall Street and the Country,” by Charles A. Conant, p. 88, G. P. Putnam’s Sons, New York, 1904.

[58] The _Wall Street Journal_, December 7, 1912.

[59] The distinction between “panics,” “crises,” and “depressions,” are clearly stated in the opening chapter of “Financial Crises and Periods of Industrial and Commercial Depression,” by Theodore E. Burton, D. Appleton & Co., N. Y., 1902. In the following pages, I use the terms as they are commonly applied in Wall Street, although this application is not always governed by sound etymology. Thus in Wall Street we speak of “the panic of 1907,” meaning broadly the events of that entire year. Strictly speaking a “panic” is the brief period of a day or an hour of unreasoning fear, brought about by the “crisis” of a money scarcity which preceded it. The period of commercial and financial suffering, which continues after the panic and the crisis have passed, is the “depression.”

[60] “Des Crises Commerciales,” Clément Juglar, Paris, 1889, pp. 44–5.

[61] “Annals of the American Academy of Political and Social Science,” Vol. XXXV, No. 3, May, 1910, p. 13.

[62] “Financial Crises and Periods of Industrial and Commercial Depression,” Theodore E. Burton, New York, 1902, p. 234.

[63] The report of the New York State Superintendent of Banks for the same period emphasizes this point by showing a steady _contraction_ of loans by State banks and trust companies of New York City during the period quoted, while all other authorities reveal a steady _expansion_ in loans by similar institutions outside the city.

[64] “The Hughes Investigation,” by Horace White, _Journal of Political Economy_ October, 1909, pp. 528–540. Mr. White quotes in this connection an article on “The Panic of 1907,” by Eugene Meyer, Jr., _Yale Review_, May, 1909, from which many facts in this chapter have been taken.

[65] _Cf._ Burton, _supra_, pp. 49–50–51.

[66] _Ibid._, pp. 227–8–9.

[67] The panic of 1837 was caused by a great expansion of banking and bank credits, and an intense speculation in real estate. In 1830 there were 329 banks in the country with a capital of $110,000,000. In 1857 there were 788 with a capital of $290,000,000. When the crisis was subsequently examined it was found that there had been an actual shrinkage of $2,000,000,000 in the value of the assets of the country, and that $600,000,000 of indebtedness had been wiped out by bankruptcy.

The panic of 1857 was due primarily to the influx of gold from California after its discovery in 1848, and to the intense passion for speculative gain which attended it. Suspension of specie payments by the banks lasted fifty-nine days. Complete recovery to the normal standard did not take place until 1860, when it was again interrupted by the events antecedent to the Civil War of 1861.

The antecedents of the crisis of 1873 were identical with every other commercial crisis--namely, speculation--the act of buying with a view to selling at a higher price, and overtrading, or the act of buying and selling too much on a given capital. Most commonly these two elements are accompanied by two others, viz.--the destruction or loss of previously accumulated capital, and the rapid conversion of circulating into fixed capital. Speculation and destruction of capital usually go together in preparing the way for a crisis.--Horace White, _Fortnightly Review_, Vol. XXV, p. 819.

The panic of 1893 was distinctly a currency panic. By a curious paradox it came at a time when the volume of currency was unprecedentedly large and constantly increasing. But the inception of the disaster had to do with its quality rather than its quantity. The repeal of the silver purchasing clause of the Sherman Law, November 1, 1893, restored confidence by assuring the commercial world that the existing volume of silver coin would be maintained on a parity with gold.

[68] _Real Estate Record and Guide_, 1906–7.

[69] Consult _Bradstreet’s_, 1907; the _Construction News_, Chicago, 1907; the _Engineering News_, 1907.

[70] “The New York Stock Exchange and the Panic of 1907,” by Eugene Meyer, Jr., _Yale Review_, May, 1909.

[71] “Credit Cycles and the Origin of Commercial Panics,” Manchester Statistical Society, December 11, 1867.

[72] Remarks of Joseph French Johnson, dean of the New York University School of Commerce, at the American Institute of Banking, October 25, 1907.

[73] Consult Burton, _supra_, pp. 109–110; Muhleman. “Monetary Systems of the World,” pp. 128, 130, 135, 140.

[74] “The Banking and Currency Problem in the United States,” Victor Morawetz, New York, _North American Review_ Publishing Company, 1909, pp. 87, _et. seq._

[75] “Collected Works,” Vol II, p. 2.

[76] Senator Burton “Crises and Depressions,” pp. 51, 52, enumerates the important indicia of crisis-producing conditions as follows:

(_a_) An increase in prices of commodities and later of real estate.

(_b_) Increased activity of established enterprises and the
formation of many new ones, especially those which provide for
increased production and improved methods, all requiring the change
of circulating to fixed capital.

(_c_) An active demand for loans at higher rates of interest.

(_d_) The general employment of labor at increasing or
well-sustained wages.

(_e_) Increasing extravagance in private and public expenditure.

(_f_) The development of a mania for speculation, attended by
dishonest methods in business and the gullibility of investors.

(_g_) A great expansion of discounts and loans and a resulting
rise in the rate of interest; also a material increase in wages,
attended by frequent strikes and by difficulty in obtaining a
sufficient number of laborers to meet the demand.

Not one of these indications of trouble was lacking in the period preceding the panic of 1907.

[77] The student who wishes to inquire at length into the subject of panics, crises, and depressions will find useful aids in the authorities already quoted, and in the following additional works:

A. Allard, La Crise Agricole et manufacturiere devant la Conference monetaire de Bruxelles; Brussels, 1893.

A. Baring (Lord Ashburton), The Financial and Commercial Crises Considered; London, Murray, 1847.

C. W. Smith, Commercial gambling, the principal cause of depression in agriculture and trade; London, Low, 1893.

C. Wooley, Phases of Panics; a brief historical review; London, Good, 1897.

C. Juglar, A brief history of panics and their periodical occurrences in the United States; New York, Putnam, 1893.

E. Goodby & W. Watt, The present depression in trade, its causes and remedies.

Henry Wood, The Political Economy of Natural Law, Boston, Lee & Sheppard, 1894.

H. M. Hyndman, Commercial Crises of the Nineteenth Century; London, Swan Sonnenschein & Co., 1892.

H. Denis, La Dépression Économique et Sociale et l’histoire des prix; Brussels, 1895.

J. Eadie, Panics in the money market, etc.; New York, 1893.

Michael G. Mulhall, History of Prices Since 1850; London, Longmans, Green & Co., 1885.

R. Browning, The Currency considered with a view to the effectual prevention of panics; London, 1869.

The Pears prize essays. London, Chatto, 1885.

W. W. Lloyd, Panics and their panaceas; London, Harrison, 1869.

W. H. Crocker, The cause of hard times; Boston, Little, Brown & Co., 1896.

[78] (8 and 9 Will, III, Ch. 32.)

[79] (6 Anne, Ch. 16.)

[80] See appendix.

[81] See p. 140.

[82] For a legal opinion concerning the rights of plaintiffs arising from memberships in a _corporation_ as contrasted with those arising from memberships in a _voluntarily unincorporated association_ the reader is referred to White vs. Brownell (2 Daly at p. 337), opinion at Special Term by Justice Van Vorst; and the same case at General Term, opinion by Justice Daly. The courts of New York State have on a number of occasions expressed their approval of the manner in which the Stock Exchange has discharged its functions under this form of organization. The reader’s attention is called to Belton vs. Hatch, 109, New York, 597, Court of Appeals.

[83] “The German Exchange Act of 1896,” by Dr. Ernst Loeb, in the _Quarterly Journal of Economics_, July, 1897.

[84] “Ten Years Regulation of the Stock Exchange in Germany,” by Henry Crosby Emery in the _Yale Review_, May, 1908.

[85] _Ibid._

[86] “The German Bourse Law,” by G. Plochmann, _North American Review_, May, 1908.

[87] “An act to regulate sales at public auction and to prevent stock-jobbing,” New York State Legislature, 1812.

[88] “An act to regulate sales at public auction and to prevent stock-jobbing,” New York State Legislature, 1858, repealing act of 1812.

[89] “Statutes at Large,” Ch. 127 and Ch. 209, repealing Ch. 127.

[90] “Economics,” by Arthur T. Hadley, New York, 1896.

[91] “Money and Banking,” by Horace White, New York, 1895.

[92] In the appendix to his work, “Some Thoughts on Speculation,” New York, 1909, Mr. Frank Fayant gives a summary of the laws of all the States, pp. 57–58. I am greatly indebted to this pamphlet for many authorities quoted in this chapter.

[93] The London Stock Exchange is also an unincorporated body. See pp. 231 _et seq._ for the report of the royal commission bearing on this matter.

[94] The question put to sureties on the London Stock Exchange is, “Would you take this man’s cheque for £3000 in the ordinary way of business?” to which an unprepared sponsor once replied, “Well, I should not pick it out.”

A similar question by the governors of the New York Stock Exchange once met with the reply, “Yes, but I would have it certified as quickly as possible.”

[95] A similar cry, “Fourteen hundred,” was long used for the same purpose on the London Stock Exchange. For a time there were but 1399 members, and each stranger who appeared was thought to be number 1400. Hence, the words came to be applied to all new members, long after the membership exceeded that figure.

[96] The celerity and accuracy of the cable service between New York and foreign centres, as perfected in arbitraging, has no parallel elsewhere. Twenty minutes are often required to complete a cable transaction between the London Stock Exchange and the Paris Bourse, and so it frequently happens, where speed is required, that messages between those two centres are cabled by way of New York.

[97] Consult “The World’s Wealth in Negotiable Securities,” by Charles A. Conant, _Atlantic Monthly_, (July, 1908).

[98] Hopkinson Smith, in the _World’s Work_ (August, 1912).

[99] “They are like unto children sitting in the market-place and calling one to another, and saying, ‘We have piped unto you, and ye have not danced; we have mourned to you, and ye have not wept.’”

[100] July, 1912, p. 94.

[101] “Worry, the Disease of the Age,” by C. W. Saleeby, M. D., F. A. Stokes Co. (New York, 1907).

[102] The English Exchequer has left a permanent impression on the language no less than on the world’s finance. Such words as “cheque,” “tally,” and “stocks,” in the sense of securities, possess an interesting history easy to trace. If one lent money to the Bank of England down to so comparatively recent a period as one hundred years ago, tallies for the amount were cut on willow sticks just as they were cut at the Exchequer in the time of the Crusades; the bank kept the “foil,” and the lender the “stock”--the earliest “bank-stock” on record. Very recently a bag of Exchequer tallies was found in a chapel of Westminster Abbey.

[103] The first Stock Exchange book was published in 1761--“Every Man His Own Broker, or a Guide to Exchange Alley,” by J. Mortimer. Mortimer, Mr. Hirst tells us, had been British Consul in Holland, and had seen the workings of the Amsterdam Bourse and the arbitrage business between London and Amsterdam, which was considerable in the middle of the eighteenth century. The book shows that many phases of speculation were already in vogue before the Stock Exchange was formally organized.

[104] “The (London) Stock Exchange,” Francis W. Hirst, London, Williams and Norgate, 1910. The attention of the reader is invited to this book. As a short study of investment and speculation in England it is exceedingly instructive, doubly so in that it comes from the pen of the editor of the _Economist_.

[105] The _Quarterly Review_, July, 1912.

[106] There are 20,000 shares (£13 paid) and £416,700 debentures outstanding.

[107] It should be said, in fairness to the London jobber, that the incident here mentioned by Mr. Hirst is a rare exception.

[108] _L’Economiste Français_, Paris, October 5, 1912.

[109] Rule 150 reads as follows: “The committee will not fix a special settling day for bargains in shares or securities issued to the vendors, credited as full or partly paid, until six months after the date fixed for the special settlement in the shares or securities of the same class subscribed for by the public, but this does not necessarily apply to reorganizations or amalgamations of existing companies, or to cases where no public shares are issued for cash.”--Rules and Regulations of the Stock Exchange. London, June 3, 1911, pp. 64–5.

[110] These figures are taken from Mr. Hirst’s Chapter VIII on “The Creation of New Debt and Capital,” pp. 212–241.

[111] It should be said that at least a part of the decline in these securities had taken place before the Balkan scare became a reality. A foreknowledge of what was impending may have influenced the earlier decline; certainly the event itself accentuated and hastened it.

[112] London jobbers were, in a way, instrumental in checking the furious speculation in “rubbers” toward the culmination of the boom of 1909–10. Their absolute refusal to carry rubber shares for brokers, and their concerted insistence that such shares should be paid for in full on the ensuing account day, undoubtedly put the brakes on a furious speculation, and prevented many failures.

[113] The _Wall Street Journal_, November 13, 1912.

[114] On the New York Stock Exchange the minimum difference between prices is one eighth and splitting of this fraction is prohibited save in the case of “rights” to subscribe or similar instances.

[115] In the settling room on ticket day stocks that are not cleared pass by ticket from broker to broker in much the same way as that provided by the Clearing House.

[116] Although an effort has been made in these pages to avoid complicated Stock Exchange technique, the contango, which is not fully understood in America, requires technical explanation. It may be defined as a double-bargain, in that it consists of a sale for cash of the stock previously bought which the broker does not wish to carry, and a repurchase for the new settlement two weeks ahead, of the same stock at the same price as the sale, plus interest agreed upon up to the date of that settlement.

[117] The methods of transacting business on the London Stock Exchange are admirably stated in condensed form in an article by Walter Landells in the _Quarterly Review_, July, 1912, pp. 88–109, and I am indebted to his article for many of the foregoing facts, and for this brief summary of London’s booms and crises.

[118] In addition to the authorities quoted in the foregoing chapter, the attention of the reader is directed to the following works having to do with the London Stock Exchange:

Lombard Street, by Walter Bagehot, New York, Chas. Scribner’s, and Sons.

Stocks and Shares, by Hartley Withers, London, Smith Elder, 1910.

Stock Exchange Law and Practice, by W. A. Bewes, London, Sweet & Maxwell, 1910.

Rise of the London Money Market, 1640–1826, by W. R. Bisschop, London, King, 1910.

The Mechanism of the City, by Ellis T. Powell, London, King, 1910.

[119] Anatole Leroy-Beaulieu, La Régence de l’argent, “Revue des Deux Mondes.” February 25, 1897, pp. 894 and 895.

(M. Leroy-Beaulieu is the elder brother of Paul, the French economist. In 1881 he became professor of modern history at the Ecole Libre des Sciences Politiques, and in 1887 was made a member of the Academy of Moral and Political Sciences. His fame as a publicist is established.)

[120] John Law was the inventor of “bearer” certificates.

[121] “The History and Methods of the Paris Bourse,” by E. Vidal, Senate Document No. 573, Sixty-first Congress (Second session), pp. 161–2.

[122] “Opérations de Bourse et de Change,” Courtois, 13th ed., p. 239.

[123] Provincial bourses in France are divided into two classes--those with parquets, and those without them. Bourses with parquets are those at Lyons, Bordeaux, Marseilles, Nantes, Toulouse, and Lille. The Minister of Finance is in control of these parquet bourses, while the Minister of Commerce controls those that have no parquet.

[124] “History and Methods of the Paris Bourse,” by E. Vidal, published by the National Monetary Commission, Washington, 1910, pp. 262–3–4.

[125] The report of the Paris Chamber of Commerce, February 8, 1882, which paved the way for this reform, is interesting reading:

“An administration of justice which would permit a speculator to carry on two deals of equal importance with two different brokers, one for a rise and the other for a fall, and, while collecting from one the profit he had made to advance the plea of gambling toward the other, in order to avoid paying the loss which the operation showed--such an administration, I say, could not hold any longer; that fact alone would condemn it.

“Experience shows that the plea of gambling has never protected anybody but those of bad faith, and has only encouraged the excess of speculation, as was stated by M. Andrieux in his report presented to the Chamber in 1877, in the name of the Seventh Commission of Initiative.

“Prompted by these reasons, and, considering that the present legislation, far from preventing gambling, encourages it; considering that bad faith finds protection in the jurisprudence sanctioned; and, further considering that in commercial affairs, as in any other, it behooves to allow every one his full freedom, as well as to hold him responsible for his actions--I beg to suggest that an address be sent to the Minister of Commerce, confirming the letter of the Chamber of Commerce of November 25, 1877, and requesting the Government to introduce a bill in the Chambers, declaring that article 1965 of the Code civil does not apply to debts resulting from dealings for future delivery, and that articles 421 and 422 of the Code penal are repealed.”

The law legalizing dealings for future delivery was enacted March 28, 1885, and formally promulgated April 8, 1885.

[126] Vidal, p. 217, _supra_.

[127] Ibid, p. 276.

[128] _Ibid_, pp. 192–3.

[129] Remarks of M. Alfred Neymarck, at the International Congress of Securities, 1900, quoted by Vidal, pp. 166–7.

INDEX

_Asterisks indicate foot-notes_

Account Day, in London, 372.

Advertising, Abuse of, 434.

Advertising, by members prohibited, 56.

Agents de Change, 51.

Agents de Change (see Paris Bourse).

Agora, of Greece, 262.

Aldrich, plan, 101.

Allard A., Crises in France, 219*.

_American Acad. of Polit. and Social Science_, 16*, 26*, 32*,
80*, 102*, 191*.

American Bankers’ Association, 207.

American, finance of future, 377.

American Institute of Banking, 208*.

Arbitrage brokers, duties of, 283.

Ashley, W. T., on Economic History, 224.

Assignats, 390.

_Atlantic Monthly_, 288*.

Bagehot, Walter, on Credulity of Speculators, 92.

Bagehot, Walter, on Banking, 99.

Bagehot, Walter, on Panics, 215–218;
_Lombard Street_, 378*.

Balkan Crisis of 1912, 76, 340, 368, 369.

_Banking and Currency Problem in U. S._, by Victor Morawetz, 209*.

Banking facilities in London, 362.

Bank loans, N. Y. (1904–1907), 190;
in the U. S. (1904–1907), 192;
in London, 362.

Bank of England, 324, 328, 357.

Bank of England, Origin of, 18*.

Bank of France and currency, 209;
and Bourse, 396;
and Germany, 209.

Banks, certifications of checks, 113;
borrowings by London brokers, 353.

Bank, deposits in N. Y., 125.

Bankers as peacemakers, 371.

Bank stock, earliest form of, 324.*

Baring, A., on Financial Crises, 219*.

Baring failure, 156, 376.

Barnard, Sir John, Act to prevent stock-jobbing, 226.

Barometer, The Stock Exchange as a, 23, 190, 308, 309.

Bearer certificates, 365, 374.

Bears, Value of, 76;
in Germany, 77. (See short selling).

Benefactions and charities of members, 317.

Bewes, W. A., _Stock Exchange Law and Practice_, 379*.

Bisschop, W. R., _Rise of the London Money Market_, 379*.

Black Friday, 251.

Blackmar, Frank W. on Legislation against Speculation, 255.

Bond brokers on ’Change, 282.

Borrowing and lending stocks in N. Y.. and London, 353–4.

Bourse, Origin of, 12*.

Bourse, Paris. (See Paris).

Bradstreet’s, 202*.

Branch offices, 426.

Brokers in London, relation to jobbers, 335, 339;
methods, 372 et seq. (See London Stock Exchange).

Browning, R., on Currency, 219*.

Bryce, James, on Good Citizenship, 133.

Bucket-shops, 55, 143, 252, 435.

Bucket-shops, War against, 149.

Burr, Aaron, 31.

Burton, Theodore E., on Financial Crises, 183*;
on Forecasting, 191, 197, 198.

Burton, Theodore E., on Crisis-producing conditions, 216*.

Burton, Theodore E., on Currency, 208.

Business Conduct Committee, 255

Business on ’Change, how conducted, 288, _et seq._

Cable service, Excellence of, 284*.

Cammack, Addison, on publicity, 161.

Capital of brokerage houses, 152.

Capital, reasons for scarcity of, 122;
exports of in London, 366.

Carry-over, contango, 375–6*.

Central Bank in America, 101.

Certificates, registered and bearer, 365, 374.

Certifications of stockbroker’s checks, 113.

Chamber of Commerce, N. Y., 206.

Chambre Syndicale, of Paris Bourse, 393.

Change Alley, 327.

Charities and benefactions of members, 317.

Chicago Board of Trade Case in U. S. Circuit Court, 65;
in U. S. Supreme Court, 66*.

China, Speculative possibilities in, 62.

Clearance Orders, 279.

Clearing House, N. Y. Banks, 109.

Clearing House, N. Y. Stock Exchange, 119, 426;
London, 365, 373.

Clearings, volume of, in N. Y. and London, 344.

Coffee Exchange, 442.

Colbert, and the French manufacturers, 254.

Collectors, on ’Change, 315.

Collegium mercatorum at Rome, 16*.

Commercial honor on ’Change, 264.

Commission dealers in markets for produce, 8.

Commissions, rate of, N. Y., 278, 281;
in London, 342;
in Paris, 395.

Committee of Arrangements, 277.

Committee on Stock List, requirements of, 363.

Companies Act, in England, 147*.

“Comparisons” by stockbrokers, 120.

Competition, essential to freedom of trade, 5.

Comptroller of Currency, Report of, 126*.

Conant, Charles A., on Establishment of prices, 28.

Conant, Charles A., on Short-sales, 89*, 93*;
on manipulation, 175*.

Conant, Charles A., on Stock Exchange Quotations, 29*.

Conant, Charles A., on Value of American Securities, 14*.

Consolidated Stock Exchange, 428.

Consols, as affected by war, 368;
dealings in, 374.

_Construction News_ (Chicago), 202*.

Contango, 375–6*.

Control of members by governors, 265.

Conveniences for members, 304.

Cordage Trust, 30, 311.

Corner in Northern Pacific stock, 290.

Corners, 30;
opinions of Hughes Commission, 423.

_Corn Laws, History of the_, J. Shield Nicholson, 255.

Cost of Living, 8.

Cotton Exchange, 441.

Coulisse, in Paris, 397, _et seq._;
membership, 398;
origin, 401;
progress, 402;
history, 404;
volume of business, 405.

Coulissiers, 51.

Courtois, A., on manipulation, 175*;
_Opérations de Bourse_, 393*.

_Credit Cycles and Origin of Panics_, John Mill, 204*.

Crises and depressions, 183*.

Criticism of the Stock Exchange, 29.

Crocker, W. H., on depressions, 219*.

Curb market, 141, 431–2–3.

Currency and the panic of 1907, 206, 210.

Currency, famines in America, 123;
inadequate laws, 352, 357;
contrasts with London, 353.

Currency, panic of 1893, 199*.

Daily settlements in N. Y., 349.

Daly, Justice, opinion, 236*.

Denis, H., depressions, 219*.

Denslow, Van Buren, on Prices and Values, 6*.

Depositors in banks, number of, 126.

Depressions, in relation to panics, 183*.

Deutsche Bank, opinion on Bourse Law, 78, 243.

_Deutsche Kapitalmarkt_, by Rudolph Eberstadt, 32*.

_Dictionnaire d’Economie Politique_, by Paul Leroy-Beaulieu, 44*.

Discipline, as maintained on ’Change, 266–7, 277.

Disconto-Gesellschaft, opinion on Bourse Law, 244.

Discounting the future, 23.

Disputes and differences, adjustment of, 294.

Diversions of members, 313.

Doremus, Robert L., on transactions, 173*.

Dresdner Bank, opinion on Bourse Law, 78, 244.

Duguid, Chas., _Story of the Stock Exchange_, 32*.

Eadie, J, on panics, 219*.

Eames, Francis L., on The N. Y. Stock Exchange, 32*.

East India Company, 325.

Eberstadt, Rudolph, _Der Deutsche Kapitalmarkt_, 32*.

_Economics_, by Francis W. Blackmar, 255.

_Economiste Français_, 163*, 349*.

Economist, London, 16, 18*, 19, 197. (See Hirst, Francis W.).

Egyptian Speculation, 62.

Emery, Henry Crosby, on Advantages of broad speculative markets, 61.

Emery, Henry Crosby, on German Bourse Law, 239, _et seq._;
on control of speculation, 256–7–8.

Emery, Henry Crosby, on Speculation on the Stock Exchange and Produce
Exchanges of the U. S., 49*.

Employes on ’Change, 289, 318.

_Engineering News_, 202*.

England, capital exports, 28.

England, Laws of, affecting company organizations, 147.

England, Laws, of affecting short sales, 95.

English capital in America, 20.

_English Corn Laws_, History of, by J. Shield Nicholson 255.

_English Economic History, Introduction to_, by W. T. Ashley, 224.

Exchange, Origin of, 12*.

Exchange Register, in Germany, 241.

Exchanges, in London in early days, 323.

Exchequer, English, 324*.

Exports of capital by London, 366.

Failures, of stockbrokers, 112, 152, 156;
in London, 331;
in Paris, 350, 395;
opinion of Hughes Commission, 423.

Fairs, in primitive countries, 5.

Farmers’ Alliance, 7.

Farmers, Speculation by, 83.

Fayant, Frank, _Some Thoughts on Speculation_, 32*, 68*, 239, 252*.

Fictitious transactions, 425.

_Financial Crises_, etc., by Theo. E. Burton, 183*, 191*.

Financial press in London, 348.

_Fortnightly Review_, on panics, 199*.

Forum, at Rome, 262.

France, Volumes of Securities in, 406.

French Government, attitude toward stockbrokers’ monopoly, 401.

Future delivery, transactions for, in France, 402, 410;
in America, 438.

Gambling as distinguished from speculating, 53–54, 417, 419, 421.

Gambling in bucket-shops, 144.

Georges-Levy, on short sales, 93.

_German Bourse Law, The_, by Geo. Plochmann, 245*.

German Bourse Law of 1896, 77, 236 _et seq._, 254;
opinion of Hughes Commission, 444.

German credit in 1912, 372.

_German Exchange Act of 1896_, by Dr. Ernst Loeb, 238*.

German Government bonds, decline in, 368.

Germany, Regulation of the Stock Exchange in, 61*.

Gold Room, 251, 307.

Goldsmiths’ Notes, in England, 324.

Gold Speculation Act of 1864, 249.

Gossip and news on ’Change, 295.

Gould, Jay, 30.

Government bonds, as affected by war, 368.

Governors of the Stock Exchange on Freedom of Margin transactions, 59*;
on Margin transactions, 52*;
on Short sales, 90;
on Usury law, 105*;
on Incorporation, 235.

Governors of the Stock Exchange, their power over members, 139, 154;
method of choosing, 266.

Grain Exchanges, 10.

Grosscup, Judge, on Value of Stock Exchange, 65.

Guarantee of stockbrokers, 154;
in Paris, 395.

Guild of Goldsmiths, 324.

Guillard, Edmond, on Origin of Stock Exchanges, 16*.

Hadley, Arthur T., _Economics_, 250.

_Harvard Law Review_, 32*.

Hatch Anti-Option Bill, 55, 252.

Hazing of new members, 276.

Hedging in cotton futures, 81, 94, 416, 439.

Hirst, Francis W., on Early Exchange in London, 327*;
on Stock Exchange rules, 330;
on functions of jobbers, 336;
on creation of new debt, 365*;
on Chinese Speculation, 63;
Early English Speculation, 18*;
_The Stock Exchange_, 32*, 45*, 63*.

History of N. Y. Stock Exchange, 306.

_History of the People of the U. S._, by McMaster, 30.

Hobbies of members, 312.

Hocking Coal & Iron Company, 30, 311.

Holding Companies, 429.

Holidays on ’Change, 301.

Holmes, Justice, of the U. S. Supreme Court, on speculation, 66.

Honor and character on ’Change, 264.

Huebner, S. S. on Stock Exchange safeguards, 25;
on Usefulness of bears, 78;
on discounting future, 190.

Hughes Commission on German Bourse Law, 245;
on Margins, 52;
on Short selling, 80;
on Curb market 142. (See also Appendix.)

_Hughes Investigation, The_, by Horace White, 64*.

Hyndman, H. M., Commercial Crises, 219.

Incorporation of Stock Exchange (London), 231–5.

Incorporation of Stock Exchange, N. Y., 139, 235, 265;
opinion of Hughes Commission, 427.

Ingall, C. D., _The Stock Exchange_ (London), 32*.

Insurance, as effected by hedging, 81.

Interest, rates of, in 1909–10, 116.

Investors in France, caution of, 408.

Inventor, dependent upon capital, 13.

Investment, its relation to speculation, 44.

Investor, Origin of word, 16.

Jevons, W. S., on prices, 7*.

Jevons, W. S., on sun-spots, 217.

Jobbers, in London, 277, 335;
relation to brokers, 336, 340;
methods, 372 _et seq._

Johnson, Joseph F., on panic of 1907, 208*.

Jonathan’s Coffee House, 327.

_Journal of Accountancy_, regulation of speculation, 258*.

_Journal of Commerce and Commercial Bulletin_, on Volume of Securities
in America, 15, 339.

_Journal of Political Economy_ 53*, 64*, 82*, 143*, 147*, 159*, 196*.

Juglar, Clément, _Des Crises Commerciales_, 185*, 219*.

Kaffir Circus in London, 62, 365, 370, 376.

Keene, James R., 30.

Labor, Dependence on the Stock Exchange, 43.

Labor, Percentage of, in America, 42.

_Laissez faire_, theory of, 253.

Landells, Walter, on London Stock Exchange, 376–7*.

Law in England affecting companies, 147, 434.

Law in England, affecting short sales, 95;
affecting speculation, 225.

Law in N. Y. regulating speculation, 247;
repealed 248.

Law, John, 390*.

Laws affecting short sales in U. S., 95, 246;
repealed, 247;
decision of court, 416, 420.

Laws of France, short sales, 404, 410.

Laws of various states, affecting speculation, 251.

Law, Usury, in N. Y., 105*.

Leeman Act of 1867, 227.

Legislation recommended by Hughes Commission, 435.

Lending and borrowing stocks, N. Y. and London, 354–5.

Leroy-Beaulieu, Anatole, on Paris Bourse, 383 _et seq._, 387*.

Leroy-Beaulieu, Paul, _Nouveau Dictionnaire d’Economie Politique_, 44*;
on Publicity, 163, 349;
on Speculation, 44.

Lexis, Dr. W., on Necessity for Stock Exchanges, 21.

Liability of stockbrokers in Paris, 395.

Listing of new securities, 168;
N. Y. and London 363;
vendor’s shares, 364;
opinion of Hughes Commission, 424.

_Lloyds_, 38.

Lloyd, W. W., on Panics, 219*.

“Loan Crowd,” 290.

Loans by banks to stockbrokers, 110, 190.

_Lombard Street_, by Walter Bagehot, 92*, 379*.

London Exchanges in XVI Century, 323.

_London Money Market, Rise of the_, by W. R. Bisschop, 379*.

London Stock Exchange, history of, 326, _et seq._;
management of, 329;
rules, 330, 364*;
membership, 332, 335;
stockbrokers, 332;
admission, 332–3;
entrance fees, etc., 333;
capital stock, 333*;
precautions against monopoly, 333;
jobbers, 336–7–8;
commissions, 342;
settlement days, 344;
publicity, 347;
borrowings from banks, 353;
transfers, 355;
volume of business, 356–7;
official list, 358 _et seq._;
securities as affected by war, 368;
the day’s work, 372.

London Stock Exchange, unincorporated, 267*.

London, The world’s banker, 366.

Luncheon Club, The, 305.

Manhattan Banking Company, 31.

Manipulation, efforts of governors to suppress, 169, 174.

Manipulation, opinions of Courtois and Conant,175*.

Manipulation, opinion of Emery, 257;
comment of Hughes Commission, 421.

Manipulation prohibited, 254

Manipulation, value of, 170.

Margin, speculation on, 50, 51, 52.

Margins, insufficient margins prohibited, 255 and 256

Margins required by stockbrokers, 147.

Margin Trading a feature of all business, 58.

Margin Trading a matter of contract, 53.

Margin Trading defined by Hughes Commission, 419.

Market in N. Y. compared with London, 340.

Market in Paris as affected by stockbrokers’ monopoly, 397 _et seq._

Markets, defined by Hughes Commission, 415.

Markets for produce, 6.

Marshall, Alfred, on legislation, 255.

Matched orders, 422.

McCulloch, J. R., _Principles of Economics_, 46*.

McMaster on Public Sentiment in Early Days, 30.

McVey, Frank L., on Stock Exchange Usefulness, 41*.

_Mechanism of the City, The_, by Ellis T. Powell, 379*.

Memberships, how obtained, 271;
prices of, 273;
value of, 274.

Members of Stock Exchange, interesting personalities, 312 _et seq._

Memorial of Paris stockbrokers, 88*.

Metal Exchange, 443.

Meyer, Eugene, Jr., on Panic of 1907, 196*, 203*.

Middlemen in markets for produce, 8.

Mills, John, on panics, 204.

Mining shares in London, 365.

Mississippi Bubble, 390.

Mistakes in executing orders, 278, 293–4.

_Modern Industrialism_, by Frank L. McVey, 41*.

Mollien, on short sales in Paris, 89*.

_Monetary Systems of the World_, by Maurice M. Muhleman, 208*.

_Money and Banking_, by Horace White, 251*.

Money, high rates for, 106*, 116, 290, 353.

Money, rates for, as affecting speculation, 118, 430;
as affected by deferred deliveries, 352.

Monopoly, on London Stock Exchange, precaution against, 333;
of Paris Bourse, 388 _et seq._, 399.

Morawetz, Victor, on currency, 209*.

Mortimer, J., _Every man his own broker_, 327*.

Muhleman, Maurice, M., 208*.

Mulhall, Michael G., on Prices, 219*.

Musicians on ’Change, 316.

Napoleon, on short selling, 87, 89*.

National Banks contrasted with State Banks, 103.

National Banks of U. S., loans (1904–1907), 192.

National Monetary Commission, 426.

New Joanthan’s, 327.

News and gossip on ’Change, 295.

Newspapers, attitude toward Stock Exchange, 132.

“New Tennessee,” 276.

New York State Food Investigation Committee’s report, 9*.

Neymarck, Alfred, on volume of French securities, 406, 410.

Nicholson, J. Shield, on Corn Laws. 255.

_North American Review_, 209*, 245*.

Norton, Eliot, on Purchase and sales of securities, 32*.

Norton, Eliot, on short selling, 86*.

Notes, of stockbrokers, 111.

Odd-lot brokers, duties of 281;
extent of business, 282.

Open Board of Brokers, 307.

Opinions of floor-brokers as to market, 297.

Overend, Gurney & Co., failure of, 376.

Panama mania in France, 62, 370, 408.

Panic of 1907, conditions antecedent to, 24.

Panic of 1873, in Austria, 197;
in America, 199*, 308.

Panic of 1825, in England, 197;
of 1847, in England, 376.

Panic of 1912, in Paris, 199, 200, 369.

Panic of 1837, in U. S., 199*, 308.

Panic of 1857, in U. S., 198–9, 308.

Panic of 1893, in U. S., 197–8–9*.

Panic of 1907, its origin, 189;
effect, 201.

Panics, crises and depressions, 183*.

Panics of the future, 184;
opinion of Mills, 204, 377.

Paris Bourse, Balkan Crisis, 369;
after war with Germany, 383–87;
Agents de Change, 388 _et seq._;
history, 388–9;
the form of monopoly, 389;
origin of monopoly, 389–390;
regulations, 391;
“right of introduction,” 392;
exclusive privileges, 393;
settlements 394;
prohibitions, 394;
liabilities, 395;
rates of commission, 395;
methods and transactions, 396 (see coulisse);
objections to monopoly, 398 _et seq._;
differences with the coulisse, 404;
volume of business, 405;
caution of public, 408.

_Paris Bourse, History and Methods of_, by E. Vidal, 392*.

Parquet, in Paris, 397 _et seq._

Partners of members, and partnership agreements, 270–1.

_Pears Prize Essays_, 219*.

Personalities on ’Change, 312 _et seq._

Plochmann, George, on German Bourse Law, 245*.

Powell, Ellis T., _The Mechanism of the City_, 379*.

Pragmatism, in economic phenomena, 127.

Prices, Relation to value, 4.

_Principles of Economics_, by Alfred Marshall, 255.

_Principles of Economics_, by Edwin R. A. Seligman, 42*, 254.

_Principles of Economics_, by J. R. McCulloch, 46*.

_Principles of Money and Banking_, by Chas. A. Conant, 93*.

Produce Exchange, 440.

Promoters, swindles of, 141.

Publicity in N. Y. contrasted with London, 347.

Pujo Committee, 176.

Punishment of members, 267.

Pyramiding, opinion of Hughes Commission, 420.

_Quarterly Review_, London, 300, 332, 377*.

Quotations, the property of the Exchange, 436.

Railroads in U. S., in 1906–7, 212.

Real Estate, Market for, 22.

_Real Estate Record and Guide_, 202*.

Real Estate Speculation, in N. Y., 202;
in other cities, 203.

Receiverships, 430.

Reforms, attitude of members toward, 311;
in listing new securities, 364.

_Regulation of Stock Exchange in Germany_, Henry Crosby Emery, 241*.

Rentes, as affected by war, 368;
settlement days, 394;
market for, 398, 404.

Resolutions adopted by the Exchange;
against manipulation, 254
against light margins, 255
on business conduct, 255

Rhodes, Cecil, 377.

_Rise of the London Money Market_, by W. R. Bisschop, 379*.

Roosevelt, Theodore, and the panic of 1907, 210–212.

Royal Commission of 1877, 238–9, 231–2.

Rubber boom, in London, 62, 369.

Russian government bonds, as affected by war, 368.

Russian industrial securities in France, 62.

Salaries of employees, 318.

“Scalping,” 355.

Scapegoat, making the Stock Exchange a, 137.

Schonberg, “Handbuch” on Speculation, 21*.

Scott, S. R., on incorporation of London Stock Exchange, 233.

Securities, Origin of, 11.

Securities, Owners of in America, 14–15.

Securities, Volume of in America, 14–15.

Securities, Volume of in London, 360;
in Paris, 406, _et seq._;
in N. Y., 359–60.

Seligman, Edwin R. A., on Legislation, 254.

Seligman, Edwin R. A., on Principles of Economics, 42*.

Settlement days, London Stock Exchange, 344, 349;
N. Y. Stock Exchange, 345;
comparisons, 351.

Settling Room, in London, 372.

Shanghai Stock Exchange, 62.

Sherman Law, 199*.

Short selling, opinion of Prof. Huebner, 78;
legalized in Paris, 402*;
opinion of Court, 416;
opinion of Hughes Commission, 420.

Silver purchasing clause, repeal of, 199*.

Smith, Adam, on Speculation, 37.

Smith, Adam, _The Wealth of Nations_, 37.

Smith, C. W., on depressions 219*.

Smith Herbert Knox, on hedging cotton, 94.

Smith, Hopkinson, on methods of brokers, 292.

Smollett, on South Sea Bubble, 325–6.

South Sea Bubble, 226, 325.

Spanish government bonds, as affected by war, 368.

Specialists, duties of, 278;
vindications of, 279;
opinion of Hughes Commission, 426.

Speculation, a feature of all enterprise, 38.

Speculation, in America contrasted with that abroad, 62.

Speculation, in American development, 307;
contrasted with England, 366;
in France, 408–9.

Speculation, in China, 62.

Speculation, in Egypt, 62.

Speculation, in France, 62.

Speculation, in Gold, (1864, 1866), 250.

Speculation, in London, 62.

Speculation, in relation to investment, 44.

Speculation, J. S. Mill, 47.

Speculation not gambling, 53, 54, 416, 417, 419, 421.

_Speculation on the Stock & Produce Exchanges of the U. S._, by Henry
Crosby Emery, 49*.

Speculation, opinion by Judge Grosscup, 65.

Speculation, opinion by U. S. Supreme Court, 66.

Speculation, origin of the word, 36.

_Speculation, Some Thoughts on_, by Frank Fayant, 32*, 68*, 239, 252*.

Speculation, as distinguished from trading, 74.

Sponsors of candidates for memberships, 272.

Sportsmen on ’Change, 317.

Stamp Tax, N. Y., 75;
in London, 355.

Stanhope, Edward, on incorporation of London Stock Exchange, 232.

State Banks contrasted with National Banks, 103.

_Statist, The_ (London) on Hughes Investigation, 256.

Stockbrokers in London (See London Stock Exchange);
in Paris, (Paris Bourse).

Stock certificates, registered and bearer, 365.

Stock companies in France, 410–11.

_Stock Exchange and The Money Market_, by Horace White, 102.

Stock Exchange, Distinction between Wall Street and, 64.

_Stock Exchange Law and Practice_, by W. A. Bewes, 379*.

_Stock Exchange_ (London), by C. D. Ingall & G. Withers, 32*.

Stock Exchange, N. Y., Rules governing brokers, 138;
the day’s work 288 _et seq._

Stock Exchange, N. Y., the building, 304–5;
history, 307;
mechanism, 418.

_Stock Exchange, Story of the_, by Chas. Duguid, 32*.

_Stock Exchange, The_, by Francis W. Hirst, 32*, 45*.

_Stock Exchange, The_ (London) Francis W. Hirst, 327*, 330*, 338, 367*.

_Stock Exchange, The N. Y._, by Francis L. Eames, 32*.

Stockholders, Rights of, 162, 164, 173*.

_Stocks and Shares_, by Hartley Withers, 379*.

“Switching,” 74.

Telephone clerks, on ’Change, their duties, 289.

Temperature of air on ’Change, how regulated, 305.

_Ten years regulation of the Stock Exchange in Germany_, by Henry
Crosby Emery, 61*.

Ticker, value of, 162*;
in London, 341–2;
in N. Y., 347, 437.

Ticket Day in London, 373.

Timidity of capital, 17.

Tontine Coffee House, 307.

Tooke, Thos., on Prices, 7*.

Traders, as distinguished from speculators, 74;
operations of, 285.

Trading posts, on ’Change, 289.

Transactions in securities, panic of 1907, 216.

Transactions on ’Change, how conducted, 288, _et seq._

Transfer of certificates, in London, 355, 365, 374.

Transfer Tax, in N. Y., 75, in London, 355.

Trust Laws, attitude of brokers toward, 311.

Unlisted Department of Stock Exchange, 166.

Usury Law, in N. Y., 105, 431.

Values, Relation to prices, 4.

Van Vorst, Justice, opinion, 236*.

Vendors’ shares, in London, 364.

Vidal, E., _History and methods of Paris Bourse_, 392;
monopoly of Bourse, 399, 401*, 403, 404.

Vidal, E., on Origin of Bourse and Exchanges, 12*.

Villeplaine, Boscary de, on short selling, 88.

Visitors’ Gallery, 286.

_Wall Street and the Country_, by Chas. A. Conant, 29*, 175*.

Wall Street, distinction between the Stock Exchange and, 64.

_Wall Street Journal_, 83*, 136, 139, 145, 165*, 173*, 178*, 372*.

Wall Street not the Stock Exchange, 428.

War, between England and a first-rate power, 367, _et seq._

War, cost of, 367.

War, Franco-German, 383, _et seq._

“Wash Sales,” 168, 422.

“Welchers,” 227, 249; in Paris, 402.

_Wealth of Nations, The_, 37.

White, Horace, on banking laws, 102, 104;
on company promoters, 142, 147*;
on gold speculation, 251;
on margin transactions, 53*;
on money rates, 115;
on short selling, 80;
on Stock market quotations, 15;
on the distinction between Wall Street and the Stock Exchange, 64;
on the Hughes Commission, 159;
on the panic of 1907, 196;
on the panics of 1837, 1857 & 1873, 199*.

Withers, G., _The Stock Exchange_ (London), 32*.

Withers, Hartley, _Stocks and Shares_, 379*.

Witwatersrand, discovery of gold in, 365.

Wood, Henry, _Political Economy_, 219*.

Woolley, C., _Phases of Panics_, 219*.

_World’s Wealth in Securities_, by Chas. A. Conant, 288*.

_World’s Work, The_, 294*.

Worry on Change, 302 _et seq._

_Worry the Disease of the Age_, by Dr. C. W. Saleeby 304*.

_Yale Review_, 61*.

_Yale Review_, on German Stock Exchange Law, 241*.

_Yale Review_, on panic of 1907, 196*.

“Yankee market,” in London, 300.

THE COUNTRY LIFE PRESS
GARDEN CITY, N. Y.

Transcriber’s Notes

Punctuation, hyphenation, and spelling were made consistent when a predominant preference was found in the original book; otherwise they were not changed.

Questionable accent marks in non-English words were neither added nor removed by Transcriber.

Simple typographical errors were corrected; unbalanced quotation marks were remedied when the change was obvious, and otherwise left unbalanced.

Duplicate chapter title pages were removed by Transcriber.

The index was not systematically checked for proper alphabetization or correct page references. The original book contained a supplement of omissions to the Index; in this eBook, those omissions have been merged into the Index.

Footnotes, originally at the bottoms of pages, have been collected, sequentially renumbered, and moved to follow the Appendix.

The two illustrations are the publisher’s and printer’s logos.

Footnote 30, originally on page 68, was not referenced in the text. Transcriber added a reference at the end of the text on that page.

Page 255: “Section 5 of Article XVI” was printed imperfectly, so the “5” may be a “3”.

Page 408: Transcriber added “to” in “from time to time”.

Page 452: The Index reference to a footnote on page 258 is not correct.