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 this4 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, prices5 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,6 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 de paris”—you will find there the modern type of these markets in their utmost perfection.1

this is why exchanges exist, not only stock exchanges, but market-places of all kinds: buyers seek the largest market they can get in order to obtain the lowest prices; sellers, in order to obtain the highest prices; and so it was learned long ago that economy of time and labor, as well as a theoretically perfect market, could be best secured by an organization under one roof of as many dealers in a commodity as could be found.2 bear in mind that this result, moreover, is best accomplished when the organization is so controlled by rigid rules of business morality as to insure to every one who does business there, great and small, rich and poor, an absolutely square deal. in such a market every purchase is made with the most thorough acquaintance with the conditions involved. each dealer, each broker, each speculator, strives to obtain the best knowledge7 of the supply and demand, and the earliest news that may affect it, and each buyer or seller has an equal and a fair opportunity to profit by the resultant effect on the market of all these various agencies. the larger the body of brokers and traders, then, the more accurate the standards of value thus created. it is a pity you could not have bought your piano under such conditions.3

demagogues have set the agricultural classes against wall street and against exchanges, but producers everywhere, in default of exchanges, are forming quasi-exchanges of their own. every day we hear of combinations, farmers’ alliances, rural co-operative movements, etc., each designed to regulate the market for eggs, butter, potatoes, and such things, and each having for its purpose the very functions which govern a stock exchange in its own field—namely, the establishment of a fair price under the nearest possible approach to ideal conditions. it is now proposed in congress that the department of agriculture shall collect and transmit to the agricultural districts by telephone and telegraph all available information concerning price movements, markets, and centres of supply and demand, this again embodying8 the essential functions performed in its own field by a great exchange.

in practice, of course, there can be no exchange to deal in perishable products of the farm, and this is a pity, because if such an exchange were practicable we should hear less of our old friend the cost of living. why? because at present the market for these commodities is controlled by commission dealers and by middlemen. the producer and the consumer are alike at the mercy of these people; the price is fixed by them; the number of bona fide dealers actually bidding against each other is limited, in many instances there is no competition whatever; the producer and the commission dealer are, moreover, widely separated; the man who sells has few sources of information, and it is the business of the dealer who buys to see that he gets none; the small producer therefore has to submit to a great inequality in price, and often to downright cheating. there is no standard. there are no rules governing the dealer, and no high-minded board to enforce his honesty. naturally this sort of thing contributes to the cost of living, since the commission dealer, on his part, regulates his profits just in proportion to the ignorance, cupidity or remoteness of the farmer, while the middlemen, of whom there are sometimes three or four, apply the same9 iniquitous processes to the ultimate purchaser—who happens to be you or me. every thinking man knows that this is rank economic error.4

a friend of mine owns a thousand-acre farm in the shenandoah valley, where he raised this year 10,000 baskets of peaches. he decided to seek one buyer, and he found him in the person of a baltimore canner, who went down to virginia, inspected the crop, and contracted for the lot on a basis of $1 for firsts, 70 cents for seconds, and 40 cents for thirds, delivered at baltimore. shortly after, the market was flooded with peaches from georgia, and the baltimore man, seeing that the crop would be plentiful, promptly “welched” on his trade, basing his action on the absurd contention that “firsts” should be three inches in diameter, although as every one knows peaches of this size are almost never to be had. this action threw all the grower’s peaches into third class, which delivered at baltimore would have netted him about 10 cents a basket.

in desperation he looked elsewhere, west, north, and south, only to hear the same monotonous answer from commission men, “we won’t buy, but we will handle your crop on a commission of 10 per cent.” meantime the crop was ripening. to make10 matters worse the railroad levied a prohibitive price, and refrigerator cars were not to be had. finally there was nothing left but to ship by express and trust to the commission men to treat him honestly. the final accounting showed that on his first shipment he netted 5? cents a basket, and on his second, 15 cents, not counting the expense of picking, packing, and hauling. so much for the producer. the consumer fared no better, for he had to pay $1.25 per basket for this fruit; one of this producer’s friends actually purchasing a portion of this very consignment at that rate. the difference therefore between 15 cents and $1.25 contributes some food for thought as to the cost of living.5

now contrast this experience of a grower having no exchange facilities with that of the western farmer who deals directly with a grain exchange. the farmer can sell his crop, even though it has not been planted. whenever he sells, and under whatever conditions, he enjoys the authoritative establishment of a price, fixed as clearly as matters are fixed in law. moreover, the price at which he elects to sell is the best price, the fairest price, and the most scientific price that human agencies can arrive at, because it is made11 by world-wide competitive bidding at the hands of skilled men in chicago, in new york, in liverpool, in berlin, in odessa, and in the argentine, all competing by cable and telegraph. think of the confidence he enjoys, and the liberty of action; think, too, what it means to him to know that the exchange through which he deals is a body of honorable men, governed by rules, bidding publicly under one roof.

but, you will say, this is all very well in its application to a grain or cotton exchange, but how does it apply to the stock exchange? you concede that scientific price-making for commodities like grain and cotton is highly necessary, but you do not see that the same necessity exists for stocks and bonds. you feel, no doubt, that the one has to do with food and raiment and is therefore indispensable, while the other merely serves to stimulate speculation and gambling, and hence is altogether unnecessary. now, in order to explain the error in this point of view, let us first see how bits of paper, called securities, came into being.

long after europe had emerged from the dark centuries following the fall of the roman empire, the needs of states and governments impelled their rulers to resort to credit, and it was discovered that the simplest way to do it was to12 issue securities, that is to say, certificates of the debt. next, it was found that in order to insure success for these operations, a market was required. intermittent or temporary sources from which credit could be obtained was not enough; constant sources of credit were essential, and, as these constant sources lay in the savings of the people, public markets in which investors could tell the value of their investments from day to day followed as a natural course.6

as time went on—necessarily the evolution was gradual—it was learned that companies having to do with all forms of business enterprises might also be formed on the same basis. the development of the world’s business outgrew its infancy days of private partnerships, and corporate organization of necessity took their place, now that the discovery of credit, through the use of securities, had pointed the way. this corporate organization, which combines the small13 savings of thousands into large sums and gives to the masses an intelligent directing force at the hands of highly trained experts, depends for its existence on the sale of its securities.

in order to understand that there can be no industrial progress without the issue of securities let us consider the locomotive engine. when in the early 1800’s it became apparent that this contrivance could be used to operate an entirely new method of transportation, people looked upon it, at first, as an interesting but quite useless contrivance, because to build railroads was an expensive undertaking and nobody had enough money to finance it. the inventor’s genius was not sufficient; another power was necessary to take it out of purely scientific hands and give it practical impulse. that power was credit; the way it was obtained was through the issue of securities, and the way securities were made popular vehicles of investment lay in providing a daily market for buyers and sellers.

as a natural result, organization followed. capital was consolidated, the rights of owners were established, a great impulse was given to various new forms of inventive genius and powerful commercial enterprises of all kinds sprang into being. with this development the market-places or stock exchanges without which capital could not14 have been enlisted kept pace. it was found that transactions in the securities which represented the people’s money should be rendered easy, quick, and safe, and that the very essence of the exchange’s functions consisted in protecting the people who were the actual owners of the enterprises by rules that would insure this result.

if we look about us to-day we find in all the great centres of the world stock exchanges at work in this important field. we find that just in proportion to the confidence which a country feels in the strength and uprightness of such a market, so enterprise goes forward with vigor, and so the national wealth increases. the success of one enterprise in its appeal to public credit through the medium of the stock exchange invariably leads to another; thus commerce and industry develop. securities in america alone, aggregate the enormous total of forty-three billion dollars.7

now, as our country’s entire physical properties are valued at one hundred and thirty billions, it is15 apparent (after making allowances for securities that are held by holding companies and hence are duplicated in the foregoing estimates) that the nation’s securities represent more than a third of the nation’s wealth. again, almost two million people are owners of these securities. the journal of commerce and commercial bulletin published dec. 26, 1912, official statistics for 247 of the large corporations. this tabulation revealed the fact that the stock of these 247 corporations alone was owned by more than a million stockholders, and it is therefore quite safe to infer that the number of shareholders in all american companies approaches, if it does not exceed, two million. i think it will not be disputed that where two million people own a third of the nation’s wealth, they are entitled, just as the farmer is, to a perfectly constructed price-making machinery that will enable them to invest their savings, or sell their holdings. having learned the difficult lesson of saving their money and the still more difficult one of increasing their surplus capital by judicious investments, are not these people entitled to the safeguards afforded by a stock exchange? “there is no other way in which true prices can be made,” says mr. horace white. “if the quotations so made are not precisely the truth in every case, they are the16 nearest approach to it that mankind has yet discovered.”8

think a moment. until the last century property and trade were so insecure that, if a man saved money, he had to hide it, or lend it through money-brokers at such usurious rates as would compensate him for what he lost in bad debts. when dr. samuel johnson wrote his dictionary in 1776 no such word as “investor” was known to the english language in a financial sense. there were pirates by sea in the old days and brigands on land. “sovereigns and nobles,” says the editor of the economist, “extorted loans only to repudiate them; governments supplied their needs by debasing the coinage, or by issuing worthless money.”9 to-day all this is changed by banks17 and stock exchanges. yet, despite these great inventions, capital is and always will be timid, and the small investor particularly must be protected and safeguarded in every possible way.

these small investors, no less than the large ones, require great convenience and promptness for their operations; they live in such widely remote parts of the country as to necessitate the placing of full reliance on prices made by the stock exchange; they must have the most accurate information; they must know that their brokers are working to obtain the best knowledge of supply and demand; they want prices fixed by the most scientific competition and by the largest possible number of competitors—brokers, speculators, and investors alike; they require a market in which they can sell and get their money at once; above all things they must know beyond peradventure that they are dealing with reputable men who uphold a fine standard of honor. these are added reasons why the stock exchange exists.10

18 if it did not exist, there would be no standard market for a large part of the country’s material wealth, indeed, as we have seen, a very great deal of this wealth could not have been created at all. at the risk of repetition let me say that the investor on the one hand, and the patent or the railway on the other hand, have nothing in common. left to themselves, they would never meet; they would be useless, because resources and money must be brought together in order to create wealth. a primary function of the stock exchange is to bring them together, and by standardizing prices, create values. similarly, the investor, without the stock exchange to guide him, would have nowhere to turn for a fair price secured by competitive bidding. he might turn to his local banker, or to individual and unorganized brokers, and trust to their honesty to invest his savings for him, but the local banker and the isolated broker would then be in the same position as the commission19 dealer and the middleman who played such havoc with that peach crop. it is painful to conceive such a situation.

worse than that, without a stock exchange to create standards and define the difference between good and bad investments, very many simple people would be at the mercy of an army of dishonest promoters and bucket-shops, for the modern invention of securities has brought with it dangers and pitfalls. the united states once swarmed with these bandits—they are now rapidly being driven to cover—but they still ply their trade in other countries, where they flourish as “banks” or “investment” companies. these chaps, to quote the editor of the economist (london), “have bought a lot of rubbish, usually called ‘bonds,’ from shaky industrial concerns or from half bankrupt states and municipalities of south america. they have bought, let us say, the 6 per cent. bonds of the yoko silk company in japan at 60, which they sell you at 90, the 5 per cent. bonds of the brazilian province of —— at 55, which they sell you at 75, and a few other similar bargains. they tell you that if you spread your risks scientifically over different countries you will be perfectly safe. you perhaps do not realize that none of these securities which you are advised to buy are quoted in the london stock exchange.20 if they were the game would be impossible.” which is only another way of saying that if there were no stock exchanges to uphold worthy enterprises and discourage bad ones, there would be no limit to the frauds practised upon gullible investors. and if this is true of a tight little island like england, how doubly true it is in a great country like ours where investors are so widely scattered.

the foregoing pages will serve to show the inquirer that what is happening in commerce, is happening in the securities which represent that commerce. because commerce goes on expanding, securities must necessarily keep pace and the stock exchange must perforce grow in importance. that much maligned individual, the speculator, now regards the whole world as his field and is eager to enter foreign markets wherever there are opportunities. in 1910 more than three billion dollars of british capital were invested in american railways alone, returning one hundred and twenty-five millions annually in interest and dividends, to say nothing of the english millions in our lands, mines, and industrial enterprises. we too are large holders of foreign securities, and the list of such holdings increases yearly. but it may be accepted as a fact that this enormous mass of corporate securities would not21 have found ownership had there been no stock exchange to market them, and standardize them, and establish daily prices for them, and give them the certificate of character that makes them ideal collateral for obtaining credit.

dr. w. lexis, of gottingen, like all other economists, recognizes the fact that stock exchanges are economic necessities. here are his opinions:

“the existence of a broad, continuous market is an economic necessity in the modern scheme of widespread investment of capital. even though the market-place is largely filled with speculators, it is plain that the greater the number of traders in securities, the greater will be the facility for buying and selling any quantity of securities. the stock market is a powerful aid in floating new issues of public securities. the speculative market takes them at once and keeps them in the floating supply until they have shown their value. the stock market also renders a useful service in giving a continuous guide to the success or failure of industrial undertakings, and the worth of their securities. the more speculators there are trading in any particular security, the greater is the opportunity to learn the real conditions of the undertaking. private investors, from a study of the speculative market in the securities they own, receive in this way a continuous market opinion on the condition of the corporations in which they are shareholders.”11

another great service rendered by the stock exchange is the means it affords of readily transferring22 securities from hand to hand. to appreciate the importance of this fact you have but to think of the difficulties and delays that attend the transfer of other forms of property that do not enjoy exchange facilities. real estate, for example, is a most excellent form of investment. but suppose the owner of real estate wants to sell in a hurry, what then? there is no large organized market, there is no way by which through competitive bidding, he can place a correct estimate of the importance of current events upon the price of his land. in the urgency of his needs he may easily be misled by “smart” or unscrupulous advisers, and this risk increases in direct proportion to his remoteness from large market centres.

the holder of securities listed on the stock exchange is quite differently situated. he is altogether independent. he knows the price of his holdings every hour of the day. he is exposed to no fraud, and at the mercy of no rumor and no unscrupulous dealer. he has positive assurance that in case of necessity, at a moment’s notice, he can obtain at the prevailing price the value in cash of every stock exchange security in his box. the ticker gives him instantaneous quotations. all the newspapers publish authorized prices for his benefit, and, as we have just23 seen, these quotations are not a one-man affair, but the combined judgment of thousands of experts, bulls and bears, bankers and brokers, speculators and investors, all over the world, bidding and offering against each other by cable and telegraph and recording the epitomized result of their bidding in the prices current on the stock exchange. such a man knows, moreover, that the price thus established is not merely the opinion of all these minds as to values to-day, but that it represents a critical look into the future. he knows, indeed, that financiers everywhere have in mind prospective values rather than present values, and so he acquires a double advantage in regulating his own action by the light of the superior knowledge thus freely given him. the importance of this “advance information” cannot be overestimated, and furnishes us with another reason why stock exchanges exist.

in 1906, for example, business conditions in this country were the best ever known. good crops, big earnings, and general optimism prevailed. but stock exchange securities did not advance in the last half of the year, because trained financiers began to foresee the first signs of trouble ahead. in the early months of 1907 this knowledge became more general, and a severe decline took place, notwithstanding the fact that the business24 of the country at large continued to be excellent. “what is the matter with wall street?” was the question in the press and on the lips of the uninformed, but wall street, or rather the stock exchange, was merely fulfilling its function as a barometer and foretelling the coming storm.

at the height of the autumn panic, on the other hand, when the press was filled with dire forebodings and the ignorant layman was frightened out of his wits, securities stopped declining and began to rise because the stock exchange mind saw that the worst was over. the brightest financial students in the world then began another process of discounting the future; the barometer plainly foretold the end of the disturbance. and all this information—a fundamental law of price movements which indicated clearly when the trouble was coming and when it had ended—was given gratis to the world in the daily published quotations of stock exchange securities.

in another chapter i shall describe the method by which the stock exchange protects its patrons, the public. as this is of particular importance in connection with the matters just cited, i call the reader’s attention to the remarks of prof. s. s. huebner, ph.d., of the university of pennsylvania.

25

“importance must be attached to the protection and safeguards which organized stock exchanges give the stock and bond holder, in regulating brokerage transactions and maintaining a standard of commercial honor among brokers.... in this connection it should be remembered that the constitution of nearly every stock exchange defines the object of the exchange as follows: ‘its object shall be to furnish exchanges, rooms and other facilities for the convenient transaction of business by its members, as brokers; to maintain high standards of commercial honor and integrity among its members, and to promote and inculcate just and equitable principles of trade and business.’ no person can be elected to membership until he has signed the constitution of the exchange, and by such signature he obligates himself to abide by the same, and by all subsequent amendments thereto. the value of this organization becomes apparent when we take account of the gigantic frauds perpetrated upon innocent investors through advertising campaigns by persons unaffiliated with any recognized exchange, or by certain members of unorganized curb markets....

“all stock exchanges provide for the arbitration of disputes which may occur between members, and if both parties are willing, between members and their customers. they also prescribe rules governing the nature of contracts, the making of all offers and bids, the registry and transfer of securities on the transfer books of the corporations, and the conditions upon which securities may be listed upon the exchange for trading purposes. practically all stock exchanges also require that all transactions must be real, and that no fictitious or unreal transactions shall be permitted; that discretionary orders cannot be accepted by brokers; and that every member of the exchange must keep complete accounts, subject at all times to examination by the governing committee or any standing or special committee of the exchange, and under penalty of suspension, no member26 may refuse or neglect to submit such accounts, or wilfully destroy the same. nor may any member, under pain of suspension (a serious penalty, involving not merely the loss of the rights and privileges of membership, but also the stigma attaching to the member as a factor in the business community), be guilty of ‘any conduct or proceeding inconsistent with just and equitable principles of trade.’”12

one of the most important functions of the stock exchange is, as we have seen, the almost automatic ease with which it directs reservoirs of capital into channels of usefulness in the world’s industry and commerce. the layman may feel that this use of the stock exchange does not affect him as an individual, but it does, and vitally. every merchant and every manufacturer, great and small, all over the world, is directly benefited by it. one may see, for example, securities of railway equipment companies quoted for weeks at a low level. this shows that the business of these companies is not profitable, and it serves to discourage owners of capital from undertaking new enterprises in that direction, because the securities of such companies cannot be sold. moreover, it shows investors, as plainly as words can tell, that this is an unsafe and unprofitable form of investment.

27 reverse the situation, and lines of industry are revealed where high and advancing prices of securities indicate a rising tide of business, with an outlook for large profits in the future. capital then takes hold cheerfully; there is a market for the new securities and a proper basis for fresh commercial development, because investors and speculators have learned from the published daily quotations of these stock exchange securities that there is good warrant for the flow of capital into such channels, and that a reasonably safe return will follow an investment in them. in commenting upon these functions of the stock exchange, mr. conant says: “through the publicity of knowledge and prices, the bringing of a multitude of fallible judgments upon this common ground, to an average, there is afforded to capital throughout the world an almost unfailing index of the course in which new production should be directed.” through the mechanism of the stock exchange, therefore, the public determines the direction in which new capital shall be applied to new undertakings. in this way our great railways were built, our western country opened to progress, and our vast industrial undertakings made possible.

“the stock market acts as a reservoir and distributor of capital, with something of the same efficiency with which a series of well-regulated locks and dams operates to equalize28 the irregular current of a river. the hand of man is being stretched out in the valley of the nile to build great storage basins and locks, and the waters which flow down the great river may be husbanded until they are needed, when they are released in small but sufficient quantities to fertilize the country and tide over the periods of drought. something of the same service is performed for accumulation of capital by the delicate series of reservoirs, sluice gates, and locks provided by the mechanism of the stock market. the rate of interest measures the rise and fall of the supply of capital, as the locks determine the ebb and flow of the life-giving water. the existence of negotiable securities is in the nature of a great reservoir, obviating the disastrous effects of demands which might drain away the supply of actual coin, and preventing the panic and disaster, which, without such a safeguard, would frequently occur in the market for capital.”13

some day, no doubt, the united states will become a great creditor nation, as england is, and then the field of these operations will be extended to other countries. when that time comes we shall take a hand, through the machinery of the stock exchange, in the development of new and immense fields of human endeavor just as london does to-day. to what extent could capital exports of such tremendous economic significance continue if so useful and so indispensable an institution as the stock exchange were abolished or interrupted? it was burke who said that “great empires and little minds go ill together,” and so29 it is with great markets and little critics. there can be no worthier purpose in the commercial world than the upbuilding of a great centre of credit designed to finance material enterprise, enrich the world, and extend the benefits of civilization to new lands and new people, based upon the credit supplied by the banker, the money provided by the speculator and investor, and the safeguards afforded by the stock exchange. and yet, curiously, the greater the effort in these directions, the greater the criticism. just in proportion to the perfection with which all these agencies equalize prices, economize time and effort, and protect the public, so they seem to attract attention, comment, and attack.14

in wall street, according to this viewpoint, everything is tainted, sinister, reprehensible, covetous and unscrupulous, just as it follows the onward march of invention, science, and progress.30 this sort of criticism will not, of course, continue. the man in the street—the average layman to whom i have ventured to address this chapter will learn sooner or later—in point of fact he is learning now—that the questionable practices in wall street which started all this hubbub, and which were a natural and a human accompaniment of the slowly developed technique of this or any other business, have now been effectually stopped. it has been a very long time, for example, since jay gould ran his printing-press for erie certificates, and that incident cannot possibly happen again. the keene type of manipulator has gone, never to return. “corners,” too, have seen their last day on ’change, and so also have other artificial impediments in the way of natural supply and demand. it has been years since the cordage scandal, and the hocking coal incident marked the end of that form of manipulation. yet there are persons who talk of these things as though they were daily occurrences, overlooking the fact that the new york stock exchange, by its own efforts put a stop to the evils complained of, and will never tolerate their return.

mcmaster in his “history of the people of the united states” tells us that in the early days in new england public sentiment was so aroused31 against the legal profession that lawyers “were denounced as banditti, as blood-suckers, pick-pockets, windbags and smooth-tongued rogues.” at that period in our history feeling ran so high against banks and bankers that aaron burr was only able to procure a charter for the manhattan (banking) company by resorting to the subterfuge of naming it, in the act, “a company to furnish the city with water.” no doubt all this rancor and hostility seemed a very serious matter to the lawyers and bankers of those days, just as the criticism of to-day strikes home to members and friends of the stock exchange.

the lawyers made many mistakes a century and a half ago when the code and its practice were imperfectly understood in this country; so it was with the early history of banking; and so in our time wall street and the stock exchange have made the mistakes which any gradually developing form of enterprise must make. but these mistakes are dead or dying, and, in their place, no doubt, there will come a better understanding all around. when that day dawns the thoughtful american will realize that the particular r?le which the stock exchange plays in promoting all forms of commercial endeavor is a boon such as no country in the history of earlier days ever enjoyed. he will contemplate his country’s progress32 with pride; he will rejoice in its capacity to outstrip other countries; he will acclaim its advancement toward the proud position now held by england, the banker and the clearing-house of the world. and he will learn—this thoughtful citizen—that material achievements like these cannot be attained without a market for capital and a market for securities.