Fifty years in Wall Street

by Henry Clews

In Boston at the same time your banks had taken out $11,995,000 of their own Clearing House certificates, but this total was never increased. After that the banking situation all over the country was slowly on the mend. But, owing to the partial suspension of currency payments by the banks, caused by runs and hoarding inspired by the use of clearing house certificates, currency and gold commanded a premium in New York ranging from 1 to 5 per cent. This premium was current from the time the certificates were first issued till the end of December, 1907. The hoarding of money was, meanwhile, enormous. After that the premium became suddenly a thing of the past, and hoarded money was rapidly deposited with the banks.

It is noteworthy that in the panic of 1873 the New York Clearing House issued only $26,565,000 of certificates, and in the panic of 1893 only $41,690,000. But these figures merely show how very much smaller New York’s banking capital, deposits, and loans were in those years than they are now.

The throwing out of employment through the effects of the panic of large numbers of men, most of them of foreign birth, resulted in a larger exodus of steerage passengers to Europe than was ever before known, these aggregating 114,078 in the first two months of 1908, while only 50,601 immigrants arrived here during those months. The outward rush commenced in November and it still continues with little abatement. But as a safety valve for unemployed labor it is perhaps to be welcomed for the time being, as it reduces the ranks of the unemployed, and when the labor of these aliens is again in demand they will return as fast as they went. They know on which side their bread is buttered.

Immigration is, however, no longer as necessary to this country as it was in pioneer times. Our aim now should be to keep out undesirable immigrants, particularly anarchists, Black Hand Italians and Armenians, and rabid socialists who come here to make trouble, and preach doctrines of equality and confiscation, entirely inimical to American institutions and national as well as individual progress.

I now come to the markets for stocks, bonds, and speculative commodities, and the recent indiscriminate attacks upon them by Mr. Bryan and others both in and out of Congress, as hotbeds of what they call gambling.

As one of the oldest members of the New York Stock Exchange I can, from my long experience, testify to the integrity and high character of its membership, and the strict discipline of that Association over those composing it. Any breach of its rules, any deviation from the line of fair dealing, or anything prejudicial to its interests, is promptly investigated and as promptly punished, when proved to the satisfaction of the Governing Committee, by fine, suspension, or expulsion. But it is very rare for a member to be either charged with or found guilty of chicanery of any kind.

It is therefore unjust and outrageous for Mr. Bryan and others who have denounced the New York Stock Exchange to call it a gambling arena and its members gamblers. They are brokers in a free market, a market open to all the world, and they are ready to receive and execute orders from all the world, and whether or not these orders are for investment or speculative account, it is not for them to inquire. Still less is it for them to discriminate against speculation, when speculative far more than investment dealings are the life of every stock exchange in the world. A stock exchange to have any value must be a free market.

Speculation in stocks is no more gambling than speculation in real estate, or merchandise, although different in degree, but there may be excesses in speculation as in everything else. The stock exchange as a body should not, however, be held responsible for the excesses of individual speculators, or for the dishonesty of men who embezzle in order to get money for the purpose of speculating. Gas should not be blamed for causing the death of a man who deliberately locks his room door, shuts his windows tight, and turns on the gas to die.

Those who know Wall Street well, as I do, know how false a view of it Mr. Bryan and others, including certain members of Congress, have given to the public. If they really had known Wall Street well, and had any conscience, they would not have said what they did say. They have misrepresented it grossly and unjustifiably, and in their moralizings upon it they have not reasoned, but ranted.

Some of them have even advocated the entire elimination of the Stock Exchange. They would thus invite financial chaos and leave investors, the banks, insurance companies, and all other corporate holders of stocks and bonds practically without a market for their securities in which to either buy or sell. This would be putting back the hands of the clock of progress with a vengeance. It would be going back to the wigwam and the canal boat, but of course it would never be tolerated and therefore be impossible.