The essential thing for a man to bear in mind who finds himself growing into this mood is that nature abhors a vacuum. His mind is empty because there is nothing to do; he must therefore _find_ something to do--some mental occupation that will banish from his mind the worries that beset him. In order to do this many members of the Exchange carry some light reading in their pockets for use in an idle hour; at the spot where the National Lead Company’s securities are dealt in the specialists maintain a compact circulating library of all the magazines and periodicals; others spend idle moments pouring over a pocket chessboard; the Reading Railway post has a constantly increasing collection of all kinds of puzzles, riddles, problems--anything to keep the mind active on the principle of _similia similibus curantur_.
The newcomer on the Stock Exchange will do well to fortify himself in some such way, for it may be accepted as gospel truth that the paralyzing effect of worry in this peculiar environment will inevitably lead to hasty actions, mistakes, and errors of judgment, unless the victim learns early in the game how to arm himself against these misfortunes. One word more: When the day’s work is done, the young member must learn Doctor Saleeby’s great lesson, that a round of the links, or a set at tennis, or any other form of outdoor diversions so dear to the youngster’s heart, will not of themselves suffice to banish cares.
He has now become a thinking animal; he lives by his wits, and he suffers from the worries incidental to brain work coupled with responsibility. I have just said that nature abhors a vacuum--in his case this especially applies to his mind. Care and worry are not driven away merely because he has made his “round” in 80 strokes--they must be pushed out by something else, something more than mere play or sport _per se_. What he requires is a new _mental_ interest, not merely to serve as a counter-irritant for the worries of to-day, but as an investment for all the years that are before him. He must have a “hobby” of some sort, no matter what, so long as it is a mental occupation which he does for the love of it--books, pictures, music, postage stamps--anything will do the trick so long as it occupies the mind and is done _for fun_. We old timers have only to look about us on the Board to see who the really happy men are, the men who are never nuisances. They are the men whose minds are not content with doing nothing.[101]
In the matter of creature comforts, members of the New York Stock Exchange have provided themselves with everything that gentlemen require. Their beautiful building, an architectural masterpiece and one of the city’s ornaments, has often been described; here it is sufficient to say that nothing is lacking in the way of conveniences necessary to the physical ease of the members. Barbers, valets, messengers, and attendants of every description are on duty; a well-equipped hospital room is ready for emergencies; showers and needle-baths, smoking-rooms, lounges, writing-rooms, reading-rooms, coffee-rooms, and a spacious luncheon club, contribute their share to the refreshment of the outer and inner man. The luncheon club, which occupies the whole upper floor, is the last word in culinary perfection. In the lounging-rooms adjoining are all the magazines and periodicals, and the walls are covered with a collection of rare prints of old New York, together with mounted trophies of the hunt presented by sportsmen members. In other days before the Exchange built its present structure the club was housed in modest quarters across New Street and a few non-members of the Exchange were admitted to membership, but now its facilities are taxed to meet the demand, and membership is restricted to the Stock Exchange, although guests are admitted at all hours.
The atmosphere in the city is often trying in the summer months because of the excessive humidity, and extraordinary measures were resorted to in the construction of the building to minimize this unpleasantness on the crowded floor, where the presence of a large number of men in a greater or less degree of physical animation but adds to the general discomfort. To meet this condition an air-cooling plant was provided--the first and the foremost example of its kind in existence, both in point of magnitude and in the exacting demands involved. By means of this remarkable triumph of mechanical skill, outer air at a temperature of say 90° is taken into the basement, eighteen hundred pounds of water (humidity) are squeezed out of it per hour, it is purified and cleansed through many walls of cheesecloth, the temperature is refrigerated down to 60°, and then, after again raising it to a point at which no dangerous results may affect a member passing in and out of the room, it is finally supplied to the great floor and again exhausted by methods that obviate drafts or dangerous currents of any kind. Aside from the members and attendants, the only person having access to the floor is the chief engineer who controls this remarkable air-cooling plant. A wizard in a way, it is curious to watch him threading in and out of the busy crowds, tasting and feeling the air which, under the black art of his necromancy, turns intolerable conditions into others quite delightful.
The history of the New York Stock Exchange has been written many times, and need be but briefly referred to here. Something approaching an organization was effected May 17, 1792, when, under a tree which stood opposite what is now 60 Wall Street, twenty-four “Brokers for the Purchase and Sale of Public Stocks” signed an agreement to charge not less than a commission of ¼ per cent. It was a day of small things; the national debt was but $17,993,000; there was but one bank in the town. Through the fragmentary data that has survived, we learn that occasional meetings of the brokers were held during the next twenty-five years at the old Tontine Coffee House, at Wall and Water streets. In 1817 the formal organization was effected and the meeting-place fixed at the Merchants’ Exchange, later the site of the Custom House, and now the property of the National City Bank. In 1853 the Stock Exchange moved to Beaver Street and in 1865 to its present situation. The “Open Board of Brokers,” a rival organization, was absorbed in 1869, and ten years later the “Gold Board” also joined forces with the parent body.
The development of the New York Stock Exchange in its early days was but a record of the country’s growth, and this in turn depended upon speculation. It was, indeed, speculation such as the world had never witnessed. How our western borders were extended as the railroads pushed onward; how trade was stimulated throughout christendom by the discovery of gold in California; how the national debt expanded at the time of the Civil War; and how, after the war, construction went ahead at tremendous pace--all these served to fan the flames of adventure and enterprise, which are the bases of speculation. The panics of 1837, 1857, and 1873, severe enough to give pause to another and less vigorous nation, seem in the retrospect to have been but starting points for a fresh development of the national spirit--a spirit which owes to speculation the extension of frontiers, the bridging of waters, the unlocking of mountains, and the transportation of wealth. In this splendid work of conquering a continent the Stock Exchange has kept pace with the march of industry. It has supplied the one great central market for the expression of the country’s progress as measured by the country’s securities, and it will continue to do so as long as an evergreen faith in America exists among its people.
The Stock Exchange is often defined as the nerve-centre of the world, and, just as every happening of importance finds an instant effect on the market, so members instinctively apply to current events habits of close analysis and nice discrimination. A failure at Amsterdam may result in liquidation in Atchisons, long a favorite of Dutch investors; prolonged drought in the Argentine may increase our foreign shipments of grain; a great engineering project, like the Assouan Dam, may lead to handsome contracts for American steel-makers; any fluctuation in rates of foreign exchange must be watched carefully to see if exports or imports of gold are impending; if a rich man dies possessed of large amounts of certain securities, sellers must be critically observed for evidences of liquidation by the heirs; speeches in Congress or in Parliament, or the unguarded utterances of statesmen, must be weighed and measured for their effect on the public mind; a great fire may lead to selling of investments by insurance companies; a revolution in Mexico may imperil American investments there; if there are political disturbances in the Balkans, the continental Bourses may be frightened; every move of the great foreign banks must then be watched closely, for the bankers to-day are the war-lords of creation, and so every event of importance the world over makes its impression on the Stock Exchange barometer.
What is going on in the Transvaal or in Alaska, the latest outbreak in China, the areas of barometric pressure in the grain country, the ravages of the boll-weevil, the market in pig iron, the latest labor difficulty, the tendencies of Socialism, the cost of living, the outgivings of our law-makers--a knowledge of all these and many similar matters is a necessary part of the stockbroker’s trade, and serves to keep his mental activities considerably above the dull level of mediocrity. Naturally this sort of occupation gives a zest to life, and makes impossible the sedentary dry-rot which the impatient broker sometimes thinks is upon him. At any rate no Sherman Law can be invoked to prevent him from learning all there is to know about men and affairs; and just as he becomes trained in habits of inquiry, and proficient in using facts as stepping-stones to conclusions, so he becomes a valuable and useful member of the community.
Critics in what may be termed the impressionist school--accustomed to a free, instantaneous, and often meaningless handling of their subject--are prone to condemn the Exchange because the action of the market when large reforms in business are impending seems to imply hostility to those reforms on the part of members. This may be typical modern impressionism, but it is all wrong. If the market declines when, for example, a large corporation finds itself at odds with the law, the downward tendency of the securities affected is the result of natural laws with which stockbrokers have nothing to do. They are but agents. Ten thousand owners of securities throughout the land may simultaneously become alarmed and sell--a familiar psychologic phenomenon which depresses prices--but to say that this result expresses the hostility of the Stock Exchange to the enforcement of the Anti-Trust Law is nothing less than an evidence of critical strabismus.
The men for whom I presume to speak, far from being hostile or indifferent to the call of revitalized business morality, are quite as deeply imbued with the potent spirit of business reform as are the men who make the country’s laws. Careful, well-considered legislation that broadens and deepens the channels of American development, that provides adequate supervision and such publicity as will guard against selfish perversion, is welcomed with gratitude by the Stock Exchange. Any thinking man ought to see at a glance that the very object of the Exchange’s existence is benefited by such laws, and prospers with their enforcement. The Cordage Trust, the Salt Trust, the Bicycle combination and the Hocking Coal episode are still bitter memories on ’Change; any law that will prevent a recurrence of these and kindred calamities is a law that strengthens the hands of every member and gives him fresh courage.
It would be difficult to find anywhere a more intelligent and interesting group of men than the members of the New York Stock Exchange. Some of them are men of peculiar personal charm, others are distinguished for especial ability in various ways, others are men with hobbies, nearly every one knows something that is worth knowing, and, what is better, talks of what he knows in the manner of culture. Given an idle hour with a wish to learn, and every dip of the net into the intellectual waters of this gathering brings up some new and delightful specimen to amuse and instruct.
The dean of the Stock Exchange, for example, who has been an active member for fifty-five years, and who is now eighty, spends several months of each year in exploring all the little nooks and crannies of the globe, remote and inaccessible places that are _terra incognita_ to your casual tourist. He is a mine of information; to know him means, in a way, a liberal education. If you are fortunate enough to have an hour’s chat with him (for when at work on the floor he is quite as active as any other youngster), you will find yourself in contact with a traveler of rare charm and culture, who will take you into strange lands of which the mere existence is but a faint recollection of your schoolboy studies.
He will tell you, with all his delightfully fresh and buoyant enthusiasm, of Agra and its Pearl Mosque, and of the surpassing beauty of the world’s architectural masterpiece--the Taj Mahal--with its marbles, its mosaics, and its lapis-lazuli. He will take you into Thibet, the Forbidden Land, through the jungles of the faraway Celebes, into the least-known corners of the Straits Settlements, and to the lonely isle of Robinson Crusoe. On his vacation next year he is going to the Falkland Islands, somewhere down Patagonia way, and the year after a letter may come from him sent out from the headwaters of the Yukon, or ferried down the Congo from Stanley Falls. Wherever his fancy roams, there this adventurer goes; no thought of sickness or danger or difficulty is permitted to interfere with his delightful hobby.
Naturally, in the cosmopolitan atmosphere of the Stock Exchange tastes are catholic and run to wide extremes. One of the members is a student of Russian literature in all its phases; he can tell you of its folklore, its peasantism, its liberal thought and its ethical ideals of society; Dostoyevski is his hobby and Melshin the poet. Beside him stands a man who has mastered the culinary art; the joy of his life is to prepare with his own hands, for the palates of his fastidious guests, dainty dishes and wonderful sauces that make an invitation to his table something worth having. One of the members is an animated concordance of Shelley, whom he studies with almost fanatical zeal; another is a disciple of Heine, whom he adores. There stands a man who went into the heart of Africa as no white man had ever done--through Somaliland into Abyssinia, thence to Lake Rudolph to hunt elephants, south to Victoria Nyanza, and finally, after hunting all the wild game of the district, on foot to the West Coast.
Near by is a traveler fresh from Mukden, the scene of the world’s greatest battle; he can tell you, too, some curious and little-known details of the awful engagement at 203-Metre Hill. Our Civil War has its survivors in a dozen Board members of to-day. One of them was shot twice at Shiloh and lived to fight the Sioux; another was a captain under Burnside at Antietam, charged the bridge at the head of all that was left of his company, and was rewarded for conspicuous gallantry; another was shot through the lungs at the second battle of Bull Run and lived through the carnage at Gettysburg; another was thrice wounded at Gettysburg and again in the Wilderness.
Here are some who charged up Kettle Hill and San Juan Hill in Cuba, and there are men who served in the navy throughout that war. Officers of high rank in the National Guard and the Naval Reserve, members of important public bodies, such as the Municipal Art Commission, the Palisades Commission, the Public School Board and the various hospital boards; mayors and other officers of suburban communities, sheriffs and deputy-sheriffs, presidents of clubs, wardens and vestrymen of churches, men beloved for their philanthropies, Oxford men, Cambridge men, Heidelberg men, graduates of all the American universities--with these and very many more like them, one is brought into intimate daily contact.
There is a legion of collectors, and these are always interesting people. One of them “goes in” for old silver, of which he has gathered a valuable display; many others collect prints, etchings, or paintings; another takes pardonable pride in his Elizabethan early editions, particularly his First Folio; another has published a standard work on the portraits of Lincoln, of which he possesses nine original negatives and many rare copies of negatives; others devote leisure hours to collecting porcelains and ceramics of all kinds, postage-stamps, coins, rugs, and tapestries. You will find here men of bucolic tastes, with hobbies in farms and extensive country estates, where one grows rare orchids and another breeds highly prized cattle, or sheep, or horses, or dogs, or poultry.
As you pause in the day’s work to listen to these interesting people talking of their pet diversions, you see why it is that hobbies are so necessary to the modern mind, and particularly to the worried mind of the Stock Exchange man. You see that the man who has nothing to divert him in leisure hours is becoming a really rare type, whereas the man of curious, busy, and active brain, who must have a hobby to be happy, is becoming more and more common. In this very marked tendency among the members of the Exchange there has been a great improvement within the last decade, and one, as I have said, that not only serves to banish the cares of to-day, but promises to become a valuable investment for the years that lie ahead.
There are some talented musicians on the floor, men who are not only proficient themselves, but who by their liberal support of all forms of music do much to encourage and maintain New York’s supremacy as a musical centre. Grand opera, the Philharmonic Society, the symphony orchestras, the choral organizations, and the army of virtuosi from abroad who have earned applause and money on these shores--all are accorded cordial support by Stock Exchange members. One of them gives rein to his altruistic tendencies by providing free concerts once a week for the submerged tenth in a crowded foreign quarter of the East Side.
In the realm of amateur sport and sportsmanship the Exchange has many enthusiastic devotees. There are several tennis champions, one of them holding a title in singles for seven years, and another a title in doubles for five years. Famous university oarsmen, football and baseball players, American golf champions, expert yachtsmen and commodores of fleets, four-in-hand drivers, polo players, horse-show judges, breeders and owners of famous stables, racquet, court-tennis, and squash champions, deep-sea fishermen and disciples of the placid Izaak, who lure their game from cowslip banks; hunters in every quarter of the world, motor-boat racers, swimmers, men of muscle and mind, men of brain and brawn, these are types that keep ever in mind the _joie de vivre_, the blue sky above, and all the stimulating enthusiasms of youth.
There is little need to speak of the New York Stock Exchange’s charities and benefactions, because these are well known. Scarcely a day passes that some one of the members does not ask of his fellows a contribution, however small, for a worthy charity with which he or the ladies of his family have come in contact, and invariably the mite is freely given, although there may not be time to spare to hear the story. The private and unostentatious benefactions of members go on at all times, and cannot be discussed here.
When the _Titanic_ went down, a fund of $25,000 was raised in a day, and a committee of members of the Exchange was on the pier when the survivors arrived to do what could be done. The Mississippi floods met with a similar response; indeed, every great calamity that spells suffering and sorrow and need finds an instant expression of sympathy and practical assistance from the floor. In times of national gravity, such as an outbreak of war, the Exchange will always be heard from with its volunteers and its funds for equipping a regiment; hospitals, churches, and all worthy charities well know that appeals are responded to with a zeal that is alike nonsectarian and generous.
Never in my experience on the floor have I heard a complaint from a deserving employee of the Stock Exchange. Salaries are wisely increased with length of service, pensions are given by the governors to aged servants; hospitals, medical treatment, nurses, and sanitariums are provided for the sick, and funds are supplied to families of deceased employees. A spirit of helpfulness, sympathy, and generosity is in the very air of the Stock Exchange, an absolutely fine spirit that takes pride, too, in caring for its own members who have been unfortunate.
Finally, let it be said that the Stock Exchange man is human. He knows the “rub of the green,” he suffers as all men suffer, but he does not complain, nor solicit odds. All he asks is fair play; a little patient study of what the Exchange stands for; a little better understanding of its usefulness in our commercial life; a little recognition of each man’s effort to uphold a high standard of business honor; a little of the cordial support which he himself, with stout optimism, extends to every worthy thing.
CHAPTER IX
THE LONDON STOCK EXCHANGE, AND COMPARISONS WITH ITS NEW YORK PROTOTYPE
There were Exchanges in London in the sixteenth century. Merchants from Lombardy had given their name to a street, and had flourished so well that they had branched out in the business of money-changing--that is, of exchanging worn, abrased and clipped coins, foreign and domestic, for those of standard weight and fineness. As trade increased and the first faint signs of progress in the matter of wealth began to develop, it was seen that this business of exchanging money was sufficiently important to warrant royal recognition; accordingly there was created the office of Royal Exchanger, and the person entrusted with this office was given the privilege of exchanging coins in the manner described. Smaller offices for the purpose were farmed out in other English towns, and each place where the business was carried on thus came to be known as “The Exchange,” a name that was ultimately applied to any covered place where merchants met to buy and sell commodities.
After the money-changers came the money-lenders--Jews, more Lombards, and finally the Guild of Goldsmiths. The last named, having long practised the business of money-lending, finally became money-borrowers, issuing receipts for these borrowings known as Goldsmiths’ Notes--the earliest form of English bank-notes--and the first step in the convenient process of translating capital, and debt, and credit, into bits of interest-bearing paper.[102] This was the state of English finance until 1694, when the Bank of England was founded, and stocks and shares came into being since the bank was a joint-stock affair. That the invention of stock certificates was a popular one, and that the authorities and the public seized upon it as a convenient means of directing capital into new and hitherto untried forms of enterprise is seen by the rapidity with which fresh undertakings were put forth. In 1698 the New East India Company loaned its capital to the government; by 1711 there was a funded debt of £11,750,000 in the shape of bank stock, East India stock, and annuities. There was also the famous South Sea Company, to be followed ten years later by a reorganization of the company with its first subscription of a million in £100 stock at £300, and a second and third subscription of larger magnitude, each accompanied by prodigious promises, and each snapped up with avidity by a public saturated with the new and hazardous pastime of speculation.
“All distinction of party, religion, sex, character, and circumstance,” writes Smollett, the historian of the time, “were swallowed up in this universal concern. Exchange Alley was filled with a strange concourse of statesmen and clergymen, churchmen and dissenters, Whigs and Tories, physicians, lawyers, tradesmen, and even with multitudes of females. All other professions and employments were utterly neglected; and the people’s attention wholly engrossed by this and other chimerical schemes, which were known by the denomination of bubbles. New companies started up every day, under the countenance of the prime nobility. The Prince of Wales was constituted governor of the Welsh Copper Company; the Duke of Chandos appeared at the head of the York Buildings Company; the Duke of Bridgewater formed a third, for building houses in London and Westminster. About a hundred such schemes were projected and put in execution, to the ruin of many thousands. The sums proposed to be raised by these expedients amounted to three hundred millions sterling, which exceeded the value of all the lands in England. The nation was so intoxicated with the spirit of adventure that people became a prey to the grossest delusion. An obscure projector pretending to have formed a very advantageous scheme, which, however, he did not explain, published proposals for a subscription in which he promised that in one month the particulars of his project should be disclosed. In the meantime he declared that every person paying two guineas should be entitled to a subscription for £100, which would produce that sum yearly. In the forenoon this adventurer received a thousand of these subscriptions; and in the evening set out for another kingdom.”
No sooner were there bits of paper to deal in than jobbers or brokers sprang up to handle them, and by natural gregarious processes these dealers gathered in one spot. Thus competition was stimulated and active markets created. The rotunda of the bank and the Royal Exchange were their first haunts, indeed until Archbishop Laud drove them out they were to be found bargaining on the wide floors of St. Paul’s Cathedral. As the business expanded they took to the neighboring streets and coffee houses, and so Change Alley, Jonathan’s Coffee House, Cornhill, Lombard Street and Sweeting’s Alley became their familiar retreats. Old Jonathan’s burned down in 1748 and New Jonathan’s in Threadneedle Street succeeded it. Here, in July, 1773, “the brokers and others at New Jonathan’s came to a resolution that, instead of its being called New Jonathan’s, it should be called ‘The Stock Exchange,’ which is to be wrote over the door.” Thus while business in the public funds was still conducted on a large scale at the bank, and dealings in foreign securities still centred at the Royal Exchange, London may be said to have had a Stock Exchange in the modern sense from that day in 1773 when the name was “wrote over the door” at New Jonathan’s.[103]
We have authority for the early history of the London Stock Exchange in a report made in 1877 by the officials of the institution to the Royal Commission. From this report it appears that the Stock Exchange at New Jonathan’s in 1773 “afforded a ready market for the operations of the bankers, merchants, and capitalists connected with the floating of the numerous loans raised at that period for the service of the State.” The members or frequenters paid a subscription of sixpence to defray expenses, drew up rules, and placed its control in the hands of a “Committee for General Purposes.” The functions of this committee were then, as now, “judicial as regards the settlement of disputed bargains, and administrative as regards rules for the general conduct of business and for the liquidation of defaulter’s accounts.” The earliest minutes on record are dated December, 1798.
War loans and a national debt increasing by leaps and bounds, with consequent activity in consols, was the principal source of business in those early days, and as these increased, so also the savings of the public and a new national spirit led to a steady growth in the business of dealing in securities. The dim receding voice of those early days still echoes in Capel Court through the medium of two holidays--May 1st and November 1st. More than a century ago these days marked the closing of the Bank of England’s books for the transfer of consols, and as consols were the only things then traded in, there was nothing for stockbrokers to do on those occasions; hence they took a holiday. And they still close the Exchange on these days--an eloquent instance of the Englishman’s adherence to tradition.
By 1801 there was not room enough in the old building, and, moreover, the report says: “It became apparent that the indiscriminate admission of the public was calculated to expose the dealers to the loss of valuable property.” Accordingly a group of Stock Exchange men acquired a site in Capel Court, close to the bank, raised a capital of £20,000 in four hundred shares of £50 each, and in May, 1801, laid the foundation of what has become through numerous additions the London Stock Exchange of to-day. The building was opened in March, 1802, with a list of five hundred subscribers, and the deed of settlement (March 27, 1802), vested the management in a committee of thirty members, chosen annually by ballot, with nine trustees and managers, separate from the committee, to have charge of the treasury and represent the proprietors. Although the rules and regulations have been amended and enlarged from time to time to meet new conditions, the constitution of the London Stock Exchange remains substantially unaltered.