Stock Exchange
a place and institution where securities are sold and purchased. In its origin it was, as the name implies, merely a place to buy and sell, and as such has had its place in the history of every town and city since men began to barter with each other.
In its early history it merely represented an agreed on locality where peo people could conveniently meet, but the desirability of an enclosed space soon became apparent and in some places, Paris among them, buildings for the convenience of those who desired to use them were erected at the public expense. In course of time the management became organized and rules were made for the enforcing of agreements. The more wellto-do negotiators formed organizations which admitted new members only on the fulfilling of certain conditions. The opportunities afforded of making money made admittance to the organization highly profitable.
Modern trading, national and international, has elevated the Stock Exchange as an institution to an importance such as it never held before , and in the capitals of the larger countries transactions of enormous put through each day. The Paris Bourse long held the position of importance in Europe, but later the Stock Exchange in London, lovalue are now STOCK EXCHANGE cated in the capital city of a great empire, which the facility of intercourse made possible by modern invention has made communicable despite the barrier of great distances, began to occupy paramount position. Dealing almost entirely in home securities at first the London Stock Exchange began a little more than a century ago to operate in the shares and certificates of other countries. These dealings increased as it became a practice to seek loans in London, and in course of time private securities , such as those belonging to railways, began to be handled along with government stock. Towards the end of the nineteenth century industrial stocks made their appearance in the trading and methods for transferring the stock of mining and similar companies from the promoters to the public began to be developed along lines that did not always prove legitimate. In the New York Stock Exchange the principal part of the trading was from the beginning in railway stock, for the institution rose to importance in an era of great expansion in the railway systems of the country.
In recent years following the practice in European countries industrial stocks have figured largely in the New York Stock Exchange, and their introduction signalized a tremendous development in the amount of business conducted.
Foreign securities did not assume proportions of importance in the New York Stock Exchange till the opening of the recent great war. American industrial expansion was SO great as to be quite enough to attract the attention of brokers, but the early years of the European War and the requirements of European countries could not but have its influence in the United States, and the dealings on the New York Stock Exchange reflected the importance of the transactions that were being made in the United States and other countries at the instance of the belligerent powers. On the other hand government bonds have never figured conspicuously in the dealings of the New York Stock Exchange , agreements relating to them being managed in the main outside of the exchange.
This applies also to the foreign government loans that have been negotiated from time to time in the country before the war and during it. The exchanges of the various large cities in the United States have built up traditions of their own which have arisen from the distinctive requirements of their local business interests. Boston has had an important hand in the control of copper- Philadelphia mining companies. The Philadelphia Stock Exchange has all along held importance as the trading center for street- STOCK EXCHANGE railway securities, and other exchanges throughout the country are regarded as the convenient market for certain welldefined securities in which the local capitalists for one reason or another have interested themselves and their communities.
The stock exchange, as the institution is viewed in the modern sense, may be said to have had its origin at the period of the creation of public debts in the seventeenth century under the system which has since continued to be employed. The incorporation of the East India Company in London is an early example of the raising of public money for corporate purposes through the medium of the Stock Exchanges. In the first quarter of the eighteenth century speculation in the South Sea Company in London habituated the public to investing in such enterprises. In that period in London trading was conducted through independent brokers who resorted to certain well-defined localities but who were not formed in a corporate union. Concentration of business caused the erection of the London Stock Exchange Building in 1801. The members of the New York Stock Exchange had to wait till 1865, before a building was erected to house them independently.
The Civil War added greatly to the development of the New York Stock Exchange, and operations largely in that period centered round the competition of capitalists interested in the New York Central railroad and the Erie railroad.
Since that time to the present the business on the exchange has been an accurate reflection of the business trend throughout the country. From 1869, the date of the completion of the two transcontinental railways, speculation in the shares of these railway companies grew.
James Fisk, Jay Gould, Daniel Drew, Cornelius Vanderbilt and their associates began to attract national attention by the importance of their trading through representatives on the exchange.
The crises, the booms, the panics, the tides of prosperity and their reactions have had their reverberations in the exchange which has served as a mirror indicating the steps in the business progress of the country. The great undertakings in the direction of railway building led to frequent issues of securities the New York Stock Exchange, though the increase of business was not always uniform. The panic of 1893 and the panics that preceded and followed it led to curtailment of business in New York. The year 1898 was marked by a financial recovery that was reflected in a considerable development in the New York Stock Exchange. In that year the on STOCKHOLM rich harvests of the United States coinciding with a period of great scarcity in Europe, the increase in exports and in manufacturing threw into relief the great volume of America's available wealth and fostered confidence in the potentiality of the country such as had never before been known. Capital began to pour into enterprises of all kinds and industrial shares began to multiply on the exchange. In 1901 the renewed confidence added greatly to the volume of speculation, and records of every kind in Stock Exchange history began to be surpassed. Purchase of stock companies by other companies which pledged their credit to raise funds began to be the rule.
The movement ended in the Northern Pacific corner of 1901 when rival specиlation forced its shares to the price of $1,000, the stock only a little previously having never exceeded the $100 figure.
The unstable figures could not last and a tremendous collapse of prices followed.
Recovery was speedy, however, and prices rose rapidly. The events leading up to the corner educated speculators to the possibilities which the rivalries of purchasing companies might bring about. In recent years the volume of business done on the New York Stock Exchange has greatly exceeded that of other exchanges.
The m membership and methods of business in stock exchanges are now limited by strict rules. Minimum commissions in New York are one-eighth of one per cent on the face value of securities bought for outside customers. Only securities listed by the committee can be dealt in. The prices of seats have ranged from $9,000 to more than $100,000.
Penalties for breaches of discipline involve expulsion or suspension for stated periods from the privileges of the Exchange. Fraud, fictitious sales, and_acceptance of smaller commissions than those indicated in the rules, are among the offenses most guarded against. A plan of clearing Stock Exchange transactions on the system of a bank clearing house is modern development in America, though used in Europe, and particularly in Germany, since the middle of the last century. a