Evening star., 1932-05-01
SECURITY MARKETS
ARE OFTEN BLAMED
FOR TRADE SLUMPS
Bear Cycles Bring Out Hos
tile Criticisms Upon Worlds
Exchanges.
FORMER STOCK TRADING
ABUSES WERE REMEDIED
Wall Street Institution May Vol
UNFAIRLY Correct Any Evils
Shown 10 Exist.
BY DIR. MAX WINKLER.

BY DIR. MAX WINKLER.
Special Dispatch to The Star.
NEW YORK, April 30-Attacks upon
organized securities markets are no new
phenomenon AS exchanges have sur
vived onslaughtS on former occasions, so
will the New York Stock Exchange sur
vive the present attacks.
History is replete with instances of
criticism leveled against exchanges
The character of the old exchange OF
London was described, about century
and a half ago, in terms about as
strong as language can express 1t. The
reason for the attacks at that time lay,
to use the words of a contemporary
in the enormous profits made by the
exchange, the malpractices of the
greater part of its members and the
insolence of the richer ones.
London Writer'S Opinion.
Those unaccustomed to such maneu-
vers, actual or alleged, naturally were
reSentful and openly came forward
against the exchange and its alleged
adverse effect upon the morale OF the
nation"
The villainy of tock-jobbing is
called a mystery or machine of trade"
in the opinion of a London journalist
who is believed to have lost substan-
tial sum in a speculative venture. Ac-
cording to another, the stock exchange
is referred to as destructive hydra
corporation of hell" A third, who had
seen service in his majestys army and
who consequently thought himself ia
miliar with military tactics, prepared
and published an elaborate outline of
how Ito besiege and bring to surren-
der that Infamous place, Change
Alley"
According to Frazar Kirkland, who
wrote on economic subjects more than
two generations ago, one of the most
outspoken critics "a former member of
the exchange who had become bank
rupt because of some ill-fated promo
tions) of the London market, declared
that the general cry against stock
jobbing has been so long, and it has
been so justly complained of as pub
lie nuisance, that these people are hard
ened in crime; all their art is a mere
system Of cheat and delusion; their
characters are as dirty as their en-
ployments, and the best thing that can
be said Of them, perhaps, is that there
happens to be two honest men among
them" The critic does not, however,
name the two. Exchange Alley he
continued his TRADE, lis, in fact. as
dangerous to the public safety as
magazine Of gunpowder to a populous
city"
Bear Markets Bring Criticism.
From the foregoing it is apparent
that, regardless of the severity of the
attacks directed against the New York
Stock Exchange and its members, the
language employed today is gentle COM
pared with that used in the middle of
the eighteenth century. 1t is curious
to observe that exchanges are generally
selected for criticism during bear mar
kets. In the course of rising markets
few, If any, find fault with the insti-
tuition or with the manner in which it's
business is conducted
1t is needless to point out that there
is definite raison d'etre for the stock
exchange. If there were none, one
would have to be invented That in
d1vidual members are often guilty of
abuses is, of course, obvious, but this
applies to other enterprises as we'll.
Furthermore, the exchange is never
known to have left unpuniShed bona
tlde abuses by any of its members or
associates. Even the most outSpoken
opponents of the stock exchange are
forced to admit this.
Due to these considerations, all the
1nvectiveS could not obStruct the prog
ress Of the London Stock Exchange.
On the contrary, the institution con-
tlnued to become more powerful and
Increased in proportion as the British
government was more extravagant and
nf 10 INli r. g.
1t became an indispensable engine of
the government itself. Nevertheless,
the latter was finally compelled. by
public opinion against alleged unsavory
operations of the exchange, and in or
der to keep up appearances, to pass
several acts against the very opera
tionS and transactions it was SO deep
ly, though perhaps not quite so openly,
encouraging.
Despite the severity of laws and reg
ulations, the same old practices were
continued Avarice, idleness and the
hope Of becoming rich in a short time
without industry eluded and evaded
all laws.
The changes finally came from with
in. Operations were once more char
acterized by honesty and integrity.
The members of the exchange became
not only the exclusive masters of the
British money market, but acquired
the power of controlling and regulating
the funds and money market of prac-
tically the entire world The pound
sterling became the emblem of inter-
national credit, and the financial needs
of nations were taken care of by Lon
don bankers. Twenty thousand million
dollars of British capital were invested
abroad and the income received on such
investments played a very important
part in the nations economic structure
War Brings Change.
The war brought about a profound
change The center of finance was
moved from the banks of the Thames
to those of the Hudson. New York took
the place of London, and the New York
Stock Exchange assumed the role which
change alley had played formerly The
rise to power and prominence created
many critics and opponents, who con-
tinuously aim their shaft at the Stock
Exchange as was done in London a CEN
tury and a half ago.
That New York will emerge victorious,
as did London may be taken for grant
ed. This does not, however, preclude
the probability that certain changes
will be effected. 1t is equally probable
that such changes will come from with
in, as was the case in London more
than $50 years ago.
(Copyright, 1882. by the North American
Newspaper Alliance, Inc.)