Edward GG Simmons. The stock exchange as a stabilizing factor in the American economy

Edward GG Simmons. The stock exchange as a stabilizing factor in the American economy

Nephew and namesake, a robber baron EH Harriman had the misfortune to be president of the New York Stock Exchange in 1929, the year of the great crash. Edward Simmons, a native of New Jersey, graduated from Columbia University in 1898 and two years later bought a place on the New York Stock Exchange. To him respectfully treated from the start. In 1909 he became manager of the Exchange, in 1921 he was electedvice-president, and in 1926 President bastard. A post he held until 1930. During his presidency, he promoted the reform. In particular, Simmons despised the speculative brokerage house such as "bucket shop", who were gambling with boulders, made use of securities and fluctuations in the market as a basis for doing rates.

In 1925, he said, 'If I could go to all investors of America - and who in our time is not an investor? - I would try to convince them that the keeper "bucket shop" and securities fraud pose a threat. "As noted by Simmons, a rogue is not using violence as common criminals, but he said:" His career can be traced to broken hearts and shattered lives. He hits the bottom of the faith that sustains the success of individual heAeA, as well as the country as a whole. "Unfortunately, most of Simmons deceived his good friend, Richard Whitney, took his place President of the New York Stock Exchange. Whitney stole money from many people, to cover bad investments.

Following the establishment in 1934 of the Securities and Exchange Commission and the inevitable internal reform, the board of directors of the stock exchange has decided to revise its constitution. At the appointed committee of three members to develop recommendations and draft amendments Simmons was chairman. Simmons has strengthened the stock market, increasing its physical capacity, bringing the number of members to 275. In the historically significant and somewhere ironic essay in 1926, "Stock Exchange as a stabilizing factor in the American economy," he proposes to market the business operations are conducted in plain sight, and all would abide by the rules. The irony is that three years after the market plunged into absolute chaos, giving a rapid onset of the Great Depression.



When we talk about the stock NyuYorkskoy tag as a stabilizing factor in the American economy, should take into account not only the one that represents the very market, but what really is economic sustainability. At the moment the call to "stabilize the economy" is heard on every corner. But too few of his supporters ever accurately define what they mean by the word "stabilization." Some people believe that price stability is their constant improvement. In fact, most people rather like a human utterance maximum enthusiasm for programs to stabilize the economy, in which the ani themselves are likely to get the most revenue in dollars and cents. On the other hand, it should be obvious: if the business stability narrowly defined as the complete absence of change and the endless continuation of the existing economic conditions, the whole progress and inventions must be excluded as factors of our future economic prosperity. It is therefore obvious that the real effectiveness of the stabilization of any given situation in the economy largely depends on the circumstances, and efforts to stabilize should not be undertaken without due consideration and analysis. Program to stabilize the economy when they are brought to artificial and inflated size, no doubt faced with the economic laws, which in the end prove to be insurmountable. A century ago the famous philosopher said, "Freedom! What crimes are committed in its name!" Contemporary philosopher could be justified for the same remark about the "stabilization" if some of psevdostabiliziruyuschih plans, so insistently offered to all sectors of the economy, and indeed would have been suddenly brought into action.

However, despite all the failed plans poppki abuse to stabilize the economy, everyone understands that unnecessary, unreasonable and unjustified changes in economic conditions almost everywhere and pernicious grim. Strictly speaking, efforts to stabilize the economy seriously and urgently laid by the development of civilization. Indeed, with the material side of civilization can be defined as a process of elimination, or at least reduce the risk and dangers of everyday life. Slowly, but nevertheless constantly civilization reduces the daily risk of physical violence against the person. It still worked wonderfully to reduce the risk of illness and disease. It is therefore not surprising that in the economic sphere, no less than in the political and medical aspects of life, civilization, more and more constantly requires termination of this preventable risks associated with the individual in his economic life.

Although, of course, the enormous popularity of the slogan "stabilize the economy" relatively fresh, the roots of the movement run deep into history. Consciously or unconsciously, the desire to have more reliable and stable economic conditions for many centuries pushed for progressive legislation and has stimulated the development of sound economic practices. But only in the last half-century, when the excessive risks of war and disease began to retreat step by step before advancing civilization, mankind has been able to dedicate time to their concerns the struggle for survival to think about the fight for quality of life.

The practical possibilities of man enable him to provide himself with food, clothing, shelter and entertainment. As the risks of war and disease to the progress of civilization are reduced, risks associated with economic life, more and more demand for attention and creative efforts. Therefore, it is likely that the current drive to stabilize the business and economics, will be one of the great problems of our age. Thus, the real achievement to reduce unnecessary economic risks more than the exact solution is only an abstract economic problem. This is a necessary contribution to a better and fuller flowering of civilization, even in the highest and most spiritual aspects. It directly contributes to a more intense and satisfying way of life, liberty and the pursuit of happiness of the entire human race.

America had more justification for the constant turmoil and change in the economic field during his youth, risky and uncertain than at the present time, when the United States so obviously reached a higher level of economic maturity. Today many of us can remember quite clearly the big economic crises that have occurred in our country in 1907, in 1914 and again in 1920 - all for the past twenty years. Sure, none of us dared to conduct its affairs during the crisis of another kind, if he could avoid it. Almost universal opinion of American business highlights a common question today: "Can the economic catastrophe in the future really be prevented by stabilizing the economy, and if so, how?"

Undoubtedly, the strong cooperative effort that has made American business after the panic in 1907 to prevent another such incident in the future, one of the most important and most meaningful achievements were full reconstruction of the mechanism of the U.S. economy and the development of new economic organizations and new business practices that can reduce and to mitigate the excessive and dangerous economic congestion in the future. Although human nature changes very little, yet businessmen of our country to a large extent have become much wiser and more want to use in your own work reasonable prudence and sensible restraint. But that is probably even more important - for the last twenty years, we have very much improved conventional methods by which our country does business and very much grown and improved those lending institutions, which is so hard and always fall blows of economic crisis.

The most conspicuous example in this direction only, of course, is the creation of our great rack and flexible Federal Reserve banking system. In 1920, the economic landscape has been marred over thunderclouds, but the storm struck - as it was earlier in 1907 - thousands of uncoordinated and isolated banking organizations not having a general guide, a single goal or a huge power that comes from the interaction of all country. Instead - and for the first time in the history of American finance - the post-war collapse in 1920 was met with our American banks led by the Federal Reserve System resolutely together and wisely. And if today - six years later - the United States enjoyed unprecedented prosperity all over the country, we all would be well to recall the courageous and efficient work done by the Federal Reserve in the very dark years of 1920 and 1921, when the soothsayers, the pessimists do not hesitate to tell us that brief flowering of American prosperity was the last war, which was destined to see our generation. In these days of our prosperity is only fair to remember, and decently organization which, during severe depression most strongly and effectively came to help the American economy.

Although it is not often recognized, the New York Stock Exchange is among the most the group of organizations, especially useful for American business community in times of pressure and stress. Based on its own past history, I say without hesitation that if the U.S. economy face a serious threat in the future, the stock exchange will fight shoulder to shoulder with the Federal Reserve and other effective organizations in the country to restore, preserve and maintain economic prosperity. Of course, the New York Stock Exchange was not created in the last twenty years - it was founded over a hundred years ago, but over the last twenty years of stock market has undergone an increase in their staff and improve their techniques, which were really great and made it a truly national and democratic financial institution it is today. But the purpose of my coming here tonight do not praise the stock market and its operations, and an explanation of these operations. Accordingly, I would like to draw your attention to some of the main ways in which currently operates the stock exchange, to bring the entire U.S. economy into a more stable and durable condition.

One of the great services in favor of economic stability, carried out by the New York Stock Exchange, is the important role it plays in the direction of capital investment in certain sectors of the economy that need it and where it misses the benefit to be applied, and transferring it from other businesses, where additional capital or is not needed or is not justified. Economists tell us that the economic depression to a greater extent are due to imbalances and capital across many sectors of modern economies. Currently on the New York Stock Exchange listed over 1,000 different stock issues, and about 1,400 different corporate bond issues, thus providing an extensive panorama of American and even foreign commercial and industrial companies represented countless thousands of today's investors, for which current quotations are available on tape ticker or in the newspapers. The stock market is becoming more and more prone to the ups and downs of groups of securities, rather than the entire market as a whole. For example, in some securities, the steel companies can be sluggish, while securities railway companies will experience an active and growing market. In general, such a development would indicate that it takes more investment capital into the railways, but not - at least for the moment - in the steel industry. During each of the so-called "boom" of the stock market certain of the securities will lag, while during the depressed stock market kahtsyuy certain groups of securities will be very little drop in price. That stock exchange identifies these inevitable economic trend, which makes them obvious to the common man, and thus provides a mechanism for quick and clever to mobilize public opinion against the right direction of investment funds of the country. The result of this is absolutely normal and is therefore often not detected the process - the U.S. industry increasingly has the ability to avoid excess capital in one place and capital shortfalls in another. Constant and careful management of investment funds in different sectors of the U.S. economy - an important stabilizing force of prosperity, and the New York Stock Exchange every year is the main facilitator, this driving force.

As I indicated, the stabilization in any case should not lead to a firm and constant prices. That's because prices in the stock market are always changing, the Exchange has the ability to increase the efficiency with which savings are used in our nation's economy. Any artificial and non-economic stabilization in the stock market will accordingly be to spoil one of the most important services in the greater stabilization of the entire U.S. trade and industry.

The second important contribution to the foundation of economic stability, carried out by the stock exchange, the increasing public awareness concerning the affairs of corporations to which it contributes. Recently, again and supplemented with detailed conditions for obtaining the right to copy the stock market to foreign government securities, as well as domestic and foreign corporations. It is impossible to understand how far we've come all in the dissemination of current and accurate information relating to our industry leading companies that have not been studied business information that is available to ordinary investors 50 or 60 years ago. Old Prospectus railway companies of the time for us curious, and explains a lot. Investor usually tell what will be in volume production, how many miles of roads and are managed by some more individual and flimsy bits of information. Balance sheets and tax returns are not regularly published. There was no regular and reliable information on the dividends. Anyone who has purchased securities on that basis, even if the securities were the largest and most reputable manufacturing companies in the country had to depend on rumors and blind faith than on analysis and sober business judgments.

But we have no means reached the end of the growing demand for greater corporate transparency, and the stock market is still doing its best to support and facilitate the movement of moody. In the overall economy may not be much stability without stability in the investment climate and stable investment is totally dependent on knowledge and facts. An important part of the bust, which we all yearn to reduce or avoid in the future, is the desire of businesses to build big capital structure in times of prosperity, not taking into account relations with future profitability. It is doubtful whether public or private right example could ever completely eliminate this eternal enemy of a stable economy. But it can be controlled by comparing at least the previous periods. It is controlled by a more complete and accurate information concerning industrial companies, for which the New York Stock Exchange so long struggled.

Perhaps the most serious threat to stability in the U.S. investment market is very old and very common problem of fraudulent securities. Do not hesitate, I would argue that the huge sums each year flows into the useless and unfair business inexperienced American investors who were persuaded to do so is not only a serious diversion of resources of the American economy, but also an important obstacle to stabilization and limiting proper of our national economic conditions .