[51] The report of the Hughes Investigating Committee is published in full in the appendix to this volume.
[52] One of the witnesses before the Hughes Committee actually recommended that the stock ticker be suppressed. Such a suggestion is silly and would lead to great confusion and many complaints from the public. The ticker is essential to publicity and offers the very protection which the Stock Exchange seeks to extend. Speculation was never so unscrupulous and wrongdoing never so abundant as in the days before this instrument was invented.
[53] L’Economiste Français, Paris, October 5th.
[54] When the first issue of Union Pacific convertible bonds matured, so many people had failed to notice that their bonds could be exchanged dollar for dollar against the stock, selling at much higher price with greater yield, that the company extended the time for conversion. It would have been entirely warranted in paying off such bondholders at par, but it spent considerable sums in advertising them of a privilege they should have known all about. In the face of all this, bonds came in for conversion many months after the extended time, and the bondholder sincerely believed that he had a grievance because his bond was redeemed at par.
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.