The Washington herald., 1914-12-27

4
war and how it was successfully me;
Is described BY q high authority, VIII
lam @. Van Antwerp. sDvernor Of the
New York Stock Exchange, and author
of The Stock Exchange from Within.
His article THE Stock Exchange and the
War" in The Independent, was written
before the exchange resumed business
and therefore deals to some extent with
problems which had to be met before
that important step could be safely taken
Mr.. Van Antwerp writes:
.'One Of the very hrst things that hap
pened when the war burst was the
paralysis OF the worlds stock exchanges.
The bourses at Toronto and Madrid
closed July g; those at Vienna, Buda-
pest. Brussels. Antwrp. Berlin and Rome
on July q; St. Petersburg. Montreal and
all South American centers July 30 The
Paris bourse, gorged with huge masses
Of unstable Balkan loans and Russian
induBtrials In addition to their own new
government loan, was 80 deluged by sales
that a market no longer existed. Accord
ingly the Coulisse and later the
bourse itself was closed. thus throwing
: all the worlds sales Of securities on the
exchanges Of London and New York. For
the first time In Its history The London
exchange, unable TO Withstand such a
torrent Of liquidation, closed its doors at
q m, July n. after the announcement
of several failures. The stock exchange
in New York alone remained open.
when the governors of our great ex-
change gathered together on that event
full morning they were burdened with re-
sponsibilities Of the utmost gravity. While
aware that IL would be a splendid achieve
ment to continue business alone among
the great security market sof the worIa,
they realized none the less that the over
night accumulation OF selling orders from
every quarter OF the world would impose
upon brokers. investors, spectators and
bankers strain that could not be borne.
"SeII at the Market"
Everybody wanted to sell in New York
because there was no other place to sell
Overnight orders revealed a frantic state
OF mind. and this was especially true
Of cables. There was no price limit Sell
at the market" was the word. and utter
Generalization the prospect Europe alone
owns $.0ooOoo,0o OF our securities. Even
IL one-fifth or one-tenth OF these hold
ings were unloaded on New York with
such suddenness. we could not have alb
sorbed them. nor could We have found a
way TO pay for them in the circumstances
that then prevailed. Literally standing
to be shot at with the certainty Of q
panic unparalleled in its consequences
to American business and industry. the
governors decided. at fifteen minutes be-
fore ten. to close the exchange. Their
action calls for nothing but praise; It's
importance to the whole community is
beyond discussion
The stock exchange is not a fair
weather lnETttHNNnn has
many panics and it has grown in
strength through all our American Vicis-
situdes. Its governors decided to close
not to protect its members but TO pro-
tect the American public from a fright
full assault on collateral values and 4
destructive drain on all forms OF credit.
No group Of bushes men IN America
suffered more from this action than the
members Of the exchange: their busi-
ness came to an end while their cx-
penses, always heavy. continued, all this
following a long period Of dullness and
diminished profits in the security mar
kets. Yet they did their duty as good
citizens, regardless Of the sacrifices in
volved.
Just as familiarity breeds contempt and
Indifference SO II sometimes happens
that facilities and conveniences with
which We are most familiar in our great
avenues VI uduC dEc 1Ol dppTCGldlcu
til they are interrupted or lost Those
who without study OF the stock exchange
have come to speak OF it as a gambling
arena cannot fail to have been impressed
with the fact that something more than a
gambling place disappeared when It's doors
were closed. What actually disappeared
was the standard American index of
trade and credit; what was closed was a
great market place whose primary func-
ton had been the distribution of Ameri-
can securities, which made possible
American enterprise. We found it incon-
venient, to be sure, TO have our securi-
ties poured back upon US by foreigners.
but that fact must not obscure the
greater consideration that II was through
these same stock exchange facilities that
foreign capital was enabled to invest in
those securities.
Persons who had never before under
stood the primary Importance Of the stock
exchange were quick to realize that q
frozen credit market had resulted from
its closing. Banks, courts, and legisla-
lures had long accustomed themselves to
a free and unrestricted market for securi-
are concerned. there is no reason why
business should not be resumed. They
have cleared up their balances and
strengthened their loans to an extent
which has put them in readiness. But
the same reason that led them to close
has thus far impelled them to remain
closed, namely, the greatest good for the
greatest number.
The purpose of the stock exchange is
ties as the one test Of values. When the
stock exchange closed its doors there
was no longer a guide upon which to
base values that had heretofore appeared
in loans secured by collateral. and this
introduced tnto our perplexities another
difficulty.
Banks Entitled to Praise.
Here again the action of the Wall
Street banks calls for the highest praise.
With the market closed for an indefinite
period these banks were forced to carry
an immense burden of loans on stock eX-
change collateral ordinarily fluid beyond
all other forms OF collateral. but now
frozen solid. All their secondary reserves
became, as It were, unmarketable invest
ments, and intrinsic values''-whatever
that may mean-came by force Of cir
cumstRnces to take the place of market
values. It0Tas a state OF affairs quite
beyond precedent, but the banks faced
It as they faced all their other difficulties
So far as am aware, not a single loan
was pressed for payment, and where coll
lateral seemed to demand re-enforcement,
the request was couched in terms Of sug-
gestIon, quite without peremptory de-
mand, while rates Of interest charged on
these loans were gradually reduced
Meantime, with the same courage and
promptness which led to the closing Of
the exchange, its members have so
STRENGTHENED their bank loans and so re-
duced them that no difficulty, I fancy,
need be apprehended on that score. They
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