The Washington herald., 1912-07-13
ONE JOB THAT WALL
STREET DOES WELL

Copyright, 1917, by C. VI. KEYS New York;
In the six months that ended June
80. about $1,000. OOO, 900 of stock and
bonds were created by the States. cit
les. small municipalities. and corpora
lions OF the United States and sold to
| the public. This does not include
, stocks and bonds that were created and
not offered to investors. but only such
issues as were brought into the market
| places.
The main part of this tremendous
distribution of securities. good and
fairly good. was accomplished by Wall
street organizations which make it
| their business TO act as middlemen be-
/ tween enterprises that need money and
! investors seeking use for money. Prob
ably quarter of the total was sold
| to banks. insurance companies, and
other investment institutions. This
quarter of the fund consisted of the
best classes of stocks and bonds which
were made during this time. This part
OF the selling is relatively easy, be
cause institutions buy when they have
money without being urged. and buy in
large blocks. An insurance company
for instance. is just about as likely to
buy 100000 of a bond that seems good
as 1t is 20 buy $1,000. This refers. of
course, to the half dozen very large
companies which are the biggest buy
ers of bonds.
Probably a half of the total fund
does not go direct from the original
banker to the final buyer. Instead II
goes into the hands Of a thousand deal
ers. brokers. and banks all over the
country and in Europe who in turn
distribute ii to their own customers
This is process that is slow and la
borious. Sometimes these dealers be-
cd Wit Sci lob,
the public will not buy. and the whole
machinery of distribution has to stop
and wait until they get their shelves
clear again. This is the condition that
is sometimes called a condition of 'un-
digested securities" If the securities
are good the process Of digestion goes
on naturally and the condition remedies
Itself in the course of time.
1t is this great task OF distributing
to investors bonds and stocks to pro-
vide huge sums OF money for the use
of the corporations and munich palities
of the country that constitute the real
business Of Wall Street. This is what
Wall Street was established for. Every
body knows. of course. that there has
grown UP in Wall Street a great spec
ulative business which has nothing
much to do directly with this process
Of raising money. and which at times
pears TO be the whole business of Wall
Street. When the speculative periods
come they usually result in interfering
with the real business % the Street be-
cause they divert investment money
into speculation. That is the reason
why the big bond dealers and under
writer's are almost always severe crit
les of the speculative business
The output of new securities this
year is not abnormally large. though
IL is a little large than usual The in
vestment market of Wall Street ham
dies every year somewhere between
$1,000. 900. 900, and $4,000. 100000 of new
securities in addition to turning over
about an equal amount or more of old
and we'll known investments. bonds.
and stocks. II is a tremendously big
job and one that goes on year in and
year out. II is also task that must
go on IL the United States Is to go for
ward in a commercial sense
1t is hard to think what would hap
pen in this country If for two years
this process of bringing together the
man who needs money and the man
who has it were to cease in Wall
Street. No considerable railroad, pub
lie utility. city improvement. or Indus
trial development puld go on under
those CIRCUMSTANCES. The banking
houses that carry on this great dis
tributing process must keep the conf
dence of the investment public or they
will not only themselves fall to pieces
but the whole country will suffer-its
commerce. its industry. and its NUM-
cipal development.