It is a common habit to speak of Wall street as the financial centre of the Republic; but only those who are acquainted with its transactions can know how true this is. Regarding Wall street and New York as synonymous terms, we find that the street is not only a great power in this country, but that it is one of the great controlling powers of the financial world. Indeed, if the prosperity of the country is as marked in the future as it has been in the past, there is good reason to believe that Wall street will control the whole world of finance. Its geographical location is in its favor. By noon the New York broker has full information of the same day’s transactions in London, Frankfort, and Paris, and can shape his course in accordance with this knowledge, while the European broker cannot profit by his knowledge of matters in New York until the next day.
The Stock Exchange of New York numbers over 1000 members, and its aggregate wealth is greater than that of any similar association in the world. The par value of the annual sales made at the regular Boards and “over the counter” is
estimated at over $22,000,000,000 annually. The par value of the authorized stocks, bonds, and Governments dealt in by the regular Boards is more than $3,000,000,000, and this vast sum is turned over and over many times during the year. The aggregate of the brokers’ commissions on the sales and purchases made by them is estimated by competent authority at $43,750,000 annually. The bulk of this enormous business is in the hands of about 400 houses.
“Out of all the incorporated banks in the United States, there are thirty situated in Wall street and its neighborhood, whose office is not unlike that of the heart in the economy of animal life. Although less than half the full number of banks in the metropolis, these thirty have two-thirds of the capital, and quite two-thirds of the circulation. By a provision of statutory law, all outside National banks, numbering some 1600, are allowed to keep one-half, and many three-fifths, of their reserve balances in New York. In this way our great financial centre is rapidly acquiring the function of a National clearing-house. These temporary deposits bear a small interest, and are subject to be called for at a day’s notice. They can only be used, therefore, by the employing banks on the same conditions. The stock market supplies these conditions. Bonds and shares bought to-day and sold to-morrow, endowed with all the properties of swift conversion, and held by men whose training has been one of incessant grappling with the new and unexpected, are the only class of property upon which money can safely be borrowed without a protection against sudden demands. On these securities, therefore, the down-town banks make call loans. The name implies the nature. The money which the thirty receive from without, together with their own reserves, is lent freely to stock-brokers, with the simple provision that it must be returned immediately upon notice, if financial exigencies require it. This vast volume of what may well be styled fluid wealth is difficult of estimate in figures. The published statements of loans made by city banks make no distinction between discounts of commercial paper and what is advanced on securities. In sum total, the thirty banks lend
weekly about $165,000,000. Indeed, including all New York banks, the average is nearly $255,000,000. During the week ending September 18, 1868, these banks lent $266,496,024. The real meaning of these last figures will be better understood when it is known that they exceed the entire average loans and discounts of all the national banks of New England and New York State, with the exception, of course, of the city itself.
Or, to take a more sweeping view, they surpass the total weekly loans of national banks in Maryland, Virginia, North Carolina, South Carolina, West Virginia, Georgia, Alabama, Texas, Arkansas, Kentucky, Tennessee, Ohio, Nebraska, Kansas, Missouri, Minnesota, Iowa, Wisconsin, Illinois, Michigan, Indiana, Delaware, and New Jersey. Nigh $180,000,000 of the amount cited above were advanced by the down-town banks. What proportion of this was lent on stocks? Probably much over one-third. As many of the other banks also make call loans, we may, perhaps, estimate that from $70,000,000 to $100,000,000 are furnished daily to the brokers and operators of New York.
“This, however, is but one element in the lending force of the city. There are five Trust Companies, with capitals amounting in the aggregate to $5,500,000, which lend, at times, $60,000,000 a week. There are also a large number of private banking houses, of which Jay Cooke & Co. may be selected as representatives, that daily loan vast sums of money on security. The foreign houses alone, which, like Belmont & Co., Brown Brothers, Drexel, Winthrop & Co., operate in Wall street, employ not much less than $200,000,000 of capital.”
VII. STOCK GAMBLING.
In the good old days gone by Wall street did business on principles very different from those which prevail there now. Then there was a holy horror in all hearts of speculation. Irresponsible men might indulge in it, and so incur the censure of the more respectable, but established houses confined themselves to a legitimate and regular business. They bought and sold on commission, and were satisfied with their earnings. Even now, indeed, the best houses profess to do simply a commission business, leaving the risk to the customer, but those who know the hidden ways of the street hint that there is not a house in it but has its secrets of large or small operations undertaken on account of the firm. The practice of buying