Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-24
Special Dispatch to The star.

NEW YUM, JhnuhIy <4.-OWen ~.
Young, addressing members of the New
York State Bankers Association, which
| held its Midwinter business conference
] at the Federal Reserve Bank, said there
! were signs that the business situation
had reached a point where it could be
regarded as more sensitive to improve
ment.
For some time, he said conditions
have been in sort of dead center be-
tween overproduction and reluctance on
| the part Of the consuming public TO
tably comes time when the needs Of
the public become imperative and he
was hopeful that improvement along
| this line would soon be manifest.
Part played by the New York Stock
Exchange in American business life was
described oy Richard Whitney, presi-
dent Of the Exchange, in an address de-
| livered at a banquet of the New York
State Bankers Association, holding its
Midwinter conference here. Mr. Whit
ney also spoke Of the close contacts that
/ have grown up between the banks and
the security markets Even the farmer
is dependent upon and benefits from
the development and operation of the
security market, Mr.. Whitney stated,
explaining that he benefits from the
capital supplied to the railroads and to
manufacturers who sell to him and buy
| from him.
Market Reflects Conditions.
Referring to the business depression,
he said I'VE all know depressions do not
last forever" and added that the effort
| made on all sides to maintain employ
| ment will inevitably make its weight
| felt in maintaining consumption"
Mr.. Whitney concluded with an ex-
preston of belief that the stock mar
ket closely reflects business conditions.
It constitutes supreme single express
sion of modern economic life" he said
1.-THE many contacts which the Stock
| Exchange possesses with the different
aspects Of American economic life are
seldom fully appreciated" he said.
when we turn from the ultimate buy
ers and holders to the original sellers of
securities, another wide sphere Of rela-
| tionships between the Stock Exchange
and American business is discovered
/ The stock market is naturally of ire
mendous consequence in the ceaseless
task Of supplying new capital for the
| permanent use Of American commerce
and industry. In this work, the COM
mercial banks of course participate. But
the primary burden falls on the invest
ment bankers, whose special task it is
1
ment banker frequently has resort to the
organized security market in this work
and by listing new security issues there
| obtains for them a distribution to in
| vestors throughout the land.
I'm this way the New York Stock
Exchange. with its vast network OF
| quotation wires furnishing current
prices to the furthermost points in the
country. and the similar network Of
private brokerage lines connecting ever
small communities with the New York
financial center, provides a regular ma
chinery for facilitating the flow of the
Nations capital into productive in
dustry. When the modern corporation
issues rights to subscribe to additional
shares, this mechanism suff1ces in most
cases to bring the matter to public at
tention and to distribute the new Sc.
| curities. With new security issues
however, banking sponsorship is prac.
tically always necessary. Yet, veal
after year, the stock markets where
such issues are listed perform an in.
dispensable task in slowly seasoning thu
issues and thus making them suitable
for the permanent security investor.
Financing Of Industries Abroad.
THE international shifting Of LISTED
| securities also has at times an irnpor.
! tant effect upon both American in.
veStorS and American industry Years
! ago, very large amounts of American
securities were held by foreign powers
AT one time, for example, as much as
! 70 per cent of New York Central stock
was registered in London. Such for
| eign holdings of our security issues have
long since been largely repurchased by
American investors, and thus reab-
Sorbed through the American security
markets. Just as American industry
| years ago benefited very greatly from
| the entry Of its securities on the for
| etgn stock exchanges. so more recently
! the New York Stock Exchange has not
only helped to repatriate American
! stocks and bonds, but also to assist in
! the financing of industries abroad by
| listing foreign securities.
so intimate have the relations be-
| tween the security market and our
major industries always been, that one
might easily trace the vast development
! and constant changes in American
business over the past century, merely
! by studying the price sheets of the
| New York Stock Exchange. Originated
in the specific effort to market the
| United States Government debt and
the shares of New York banks and In
surance companies, the New York stock
| market has for over a century per-
! formed similar services for the Securi-
| ties of our vast modern railways sys-
TEN, for our great eXtractive industries
| in coal, oil and the whole range OF
| metals, and also for our extensive public
utility, manufacturing and commercial
lines of business. In recent years q
| process of what we might call mass
investment has been required to finance
the heavier and heavier mechanical re-
quirements Of mass production, and al
most all of the producing interests OF
the country have resorted to the stock
market to obtain the new capital which
| progress and new invention have sc
continually necessitated.
How Farmer Benefits
Almost alone among American pro-
ducers. the farmer has rarely incorpo-
rated his business, but has continued to
conduct it as an individual Thus there
have never been share issues represent
| ing agricultural production of sufficient
size for public distribution. The stock
market has therefore been unable to as
sist the financing of agricultural pro-
duction In the same way that Is has
with other industries. If such agricul-
tural securities existed, there is, of
I course, no reason why they could not
| be listed on the Stock Exchange. FIRE.
quently the distributors of farm prod
ucts have incorporated and their bonds
and shares have long been listed and
! dealt in upon the exchange. Such
listed issues as Armour or National