Otto Kahn. New York Stock Exchange and public opinion

Otto Kahn. New York Stock Exchange and public opinion

Otto Kahn, a German by birth, became the JP Morgan of his time as a powerful partner, the renowned investment banking house, "Kuhn, Lobe." One colleague described him as "Lorenzo de 'Medici of his time ... with an expression of alienation from everything so plebeian as money." And it was a man who never graduated from high school and who loved to write essays, poems and short stories. His mother, OA-However, she advised him to burn his works.At age 16 he started his banking career as a clerk in a small jar. He said: "My first promotion was to recognize zeal, energy and patience with which I served nakleyschika brands." In 1890 he persuaded his employer, "Deutsche Bank", put it in the London office of the bank. Three years later he was in New York and worked as a clerk in an international arbitration bankers house, "Speer & Company."

Once in New York, Kahn studied the banking activity, and learned that two of the most influential firms were "JP Morgan" and "Kong, Lobe." He asked to take it to work s the latest. In 1896, he married the daughter of a partner firm, which was clearly a tradition of men wanting to join. There he joined the struggle that "Kuhn, Lobe," led to "J. P. Morgan 'for control of the major railroads. Money is made on the railways, and his own personal investment made Kahn extremely rich. He knew that he must repay a debt to society, and in 1903 became a goal on the board, "Metropolitan Opera" his pet project. Many times it will be able to see the partners in the office of the operatic score next to the report of the stock exchange.

Progressive Kahn was never afraid to say publicly that the government should regulate business. Such a line soon attracted the truth of President Theodore Roosevelt, who began to consult with Kanom on financial issues. As Charles Merrill, Kahn supported a more active self-regulation and occasionally shocked Wall Street proposals, which would have made all the more honest. In "The New York Stock Exchange and public opinion," he spoke on some of these difficult issues, such as moral obligations and public opinion on Wall Street.



A few weeks ago I went to Washington to deny the committee of Congress as a voluntary witness under oath and wanton gross libel on anything not based, except for anonymous and irresponsible speculation which suggested to me.

On the way from New York to Washington, thinking that I, during a speech before the committee may be asked a series of questions, more or less located in the part of the investigation committee, I brought myself a little mental exercise fun, going through an imaginary investigation .

With your permission, let me list some of these imaginary questions and answers.


Should the Exchange "regulate"?
Question:

There is a fairly widespread view that the stock exchange's activity should be restricted and controlled by some government agencies, it needs to be reformed from the outside. What can you say on this subject?

Answer:

I do not need to indicate your committee on the need to distinguish between the stock exchange itself, and those who use the stock exchange.

Most complaints to the stock exchange is due to human activities, not included in its organization, and whose behavior it does not control. Without a doubt, at times there were deficiencies and negligence in management practices by the stock exchange, as well as it does in any other organization controlled by human beings, some things, though they have not been approved, but at least tolerated in the past that did not consistent with current ethical views.

The same can be said of almost all other organizations, even the Congress. For example, several years ago to receive donations from corporations on the campaign trail, taking free train travel congressmen and senators was a common practice, which shook the conscience not as recipients, and the public. Now this is not tolerated in public opinion and correctly made illegal.

Ethical views are changing, the boundaries of what can be allowed from the standpoint of morality, have become tougher, it's a normal process by which a civilization moves forward.

RTS has never tried to resist the arrival of more stringent standards, the contrary, in its own sphere, it always focuses on the development of standards, and it showed itself ready and willing to adopt best practice, whenever experience shows that they are reasonable, or there was a proposal to introduce .

In their requirements for admission of securities to quotation on the publicity of its operations, according to the creditworthiness of its members, its rules governing their activities and supervision of enforcement of such regulations, the New York Stock Exchange is located, at least on a par with any other stock Exchange throughout the world, but in reality it is more advanced than almost all others.

The informal exchange "on the side" could not exist if not for the severity of claims in the interests of the public, which sets the Stock Exchange for admission of securities for sale within its walls and under its jurisdiction.

There is no other such stock exchange, where a crowd had such control over the execution of orders, which is achieved by the practice - unique in the New York Stock Exchange - the immediate registration and public notice for ticker and a daily list of transactions each transaction, once it is made.

I am familiar with the stock exchanges in London, Berlin and Paris and did not hesitate to say that in general the New York Stock Exchange is the most effective and best managed organization of like it around the world.

The recommendations made by a commission appointed by Governor Hughes some time ago, were immediately and fully accepted by the stock exchange. Some of the abuses that crept into its system a few years ago, immediately corrected. From time to time will exhibit other disadvantages (some at this very moment there may be being overlooked), as manifest deficiencies in any organization, and will fight with them and correct them.

I have no doubt that in cases where public opinion or the relevant authorities pay attention to the weaknesses that can be found in the stock market, or where this can be detected by a government authority or members of the exchange, can safely be sure they can be corrected quickly.

It is true that sometimes and in some respects, outsiders may have better vision than those who have years of experience and practice.

If there were any measures that would have been just lead to better fulfill the purpose for which the Stock Exchange was created and designed to serve, I am sure that members of the Exchange would not allow himself to be led or be influenced by the limited conservatism, and would welcome such measures, no matter where they occur.


EXCHANGE IS JUST A PRIVATE ORGANIZATION?
Question:

Do I understand what you mean that the stock market npocmo private organization and as such can not be controlled by the state authorities and has to do with them?

Answer:

I'm sorry, but this is not the meaning that I wanted to convey. Although in theory the Stock Exchange a private organization, it actually performs a public function a huge national significance. Its function - to provide free and fair, broad, and a real market for the securities and, in particular, for the symbols of wealth and industrial enterprises in the country, t is, stocks and bonds of corporations.

Without such a market, without a trade and distribution center, a broad, active and enterprising, corporate activities can not exist.

If the stock market ever forgot about the public nature of their functions and duties of their state, if due to incapacity or for some other reason she ever will not meet the requirements or unreliable in providing services to the country, which constitute its meaning , the intervention of the authorities, state or federal will not only correct, but it will be their responsibility.

But while I am not aware of the existence of any serious reason to call for such intervention.


SHORT SALE - MOZHHO whether it justified?
Bonpoc:

You started your first answer with the words: "I do not need to specify your committee. This kind suggestion, but I do not npomus tell you that we here know very little about the work of the stock exchange or with yours, people on Wall Street, things in general. What can you say about the kings of the sale?

Answer:

I do not mean to take a hypocritical position, but as for me, I never sold the shares short. Short sellers are born, not made. But if it had not been born people who sell short, they had to be invented.

Short selling has a legitimate place in the economic system. It is a deterrent to excessive optimism, she seeks to neutralize the danger of unrestrained growth market, it gives stability during a strong market view at the time of an unexpected shock and panic, and it a valuable element in the prevention of extreme growth or decline.

The short seller undertakes to deliver at a specified price a specific number of shares which he has at this time, no, but that he expected the market direction will allow him to buy at a profit. At its core, this is not very different from what each supplier and trader, when he was in the business of the ordinary type is taken to perform work or deliver goods without advance all materials that go into the work or goods.

The practice of short selling officially endorsed by economists, beginning with the first Napoleon's Minister of Finance and to Horace White, in our time. Although at various times enact laws to prohibit these actions, it is noteworthy that in each case, about which I know, these laws are repealed after a brief exposure.

I was told from a good source, although I personally can not vouch for the accuracy of the information that short sales in our time is not carried out on a fairly independent stock exchange in Tokyo, Japan. You can find in the newspapers that, when a peace message from President Wilson's (or was it about this world, the German chancellor?) Became known in Tokyo, the stock market there has started a panic forces that had to close the doors of the exchange. A few days later tried to open them again, but after a short period of trading have been forced to suspend them again.

Assuming that my information is correct, we are seeing here an example of shedding light on the cause and effect,

Short sales are really evil and then to such extent that the methods and intentions of the short sellers are dishonest. A short seller is acting as a fierce lion (or "bear"), seeking whom he may devour; T0T who deliberately smashes values, undermining them by fraud or causing confusion by disseminating false reports or rumors of untested exciting character, and goes wrong should be punished

Perhaps the administration of the stock exchange is not always sufficiently alert and carefully enough in the search and punish intentional Homewrecker values ??and distributors of evil omens. Probably lacks sufficient energy and determination in dealing with the dark and dangerous evil trade rumors on the stock exchange and in brokerage offices, I need hardly add that the activity in which I touched, really wrong and punishable, when targeted and used for artificial bulge, as well as for artificially low prices.

But in the end, as the present investigation, even Congress, which has in the hands of almost unlimited power, it seems, is not always easy to cope with hunting down fraudulent sellers to the most rumors of their dens and their exposure to punishment. But unjustified attack on the good name more serious and heinous crime than assault, even by undermining the false reports, the market price of his property.


"Shear" is the audience?
Question:

From time to time, we hear or read that the public had been deceived. There are a lot of smoke. Hem is there fire?

Omvet:

If someone is really "shorn", the fault lies mainly on the outer or unscrupulous schemers financiers, over which the stock exchange there is no effective control. Some people imagine themselves to be deceived, while the real problem in their greedy desire to "get rich quick" by buying vysokospekulyativnyh or poor quality of the securities, or entering the market than their capabilities, or when they made the wrong decision with respect to the time of purchase or sale. I do not know an effective tool against such cases, since there is no way to prevent people overeat or eat something that he is bad.

In saying this, I do not mean that there are no obligations of brokers on the exchange. On the contrary, they have a very clear and broad obligations to their customers, especially those who are less familiar with the stock market and financial affairs, and in relation to the public at large. Moreover, they have a duty to refrain from the temptation to over-or Encouraged people to speculate on margin, especially people with limited means, and the opening or continuation of the accounts, insufficiently protected margins.

In accordance with the latest stock market a few years ago to be properly enforced austerity of its rules, and it can not be too hard to resist the violation of these rules or too vigilantly protect their prevarication.

The legislation should be created barriers against unfair promotion and financing, which prohibit any transaction with any public securities industry (with respect to securities of railway and utility companies, the existing commissions provide sufficient protection to the public), except in cases where their introduction accompanied by a prospectus, explaining every important detail about the company concerned and the proposed security. These brochures must be signed by persons who are responsible by law for any willful omission or false statement.

Such a law would be similar in its aims and functions with the "Law of clean food." If he went beyond its objectives and functions, it might be too harsh, "The law of pure food" does not attempt to prescribe what should be a man when he should have, or what for him is good, and that - bad but it requires that the ingredients that are sold as food by man, must be honestly and openly stated. The same principle should prevail in the supply and sale of securities.

If the medication contains water, its quantity or proportion should be indicated on the label so that you could not sell a full bottle of water, while you think you are buying a tonic, the same way should be frankly and openly stated the proportion of water in issuance of shares.

Purchaser shall not be under the impression that he is buying shares of the company that owns the physical assets, when in fact he buys expectations, capabilities, or goodwill. They can be and often are, very valuable elements, but the buyer should be allowed to judge on that in an open and clear to him the facts.

The chief evil dilutive shares is not in the presence of water, and harboring or embellishment of this liquid. Despite the unenviable reputation that people's opinion attributes to diluted shares, they are definitely two sides of the issue, always causing to the most accurate and complete publicity was given to all relevant facts relating to the establishment and nature of shares.


REALLY "BIG PEOPLE" TO SEND THE MARKET UP OR DOWN?
Question:

Is not the fact that some of the "big people" gathered while om time together and decide to send the market up or down so as to seize profits on the sale and purchase?

Answer:

As for the "big men" found, to determine the course of the stock market, it's one of those legends and superstitions, from which it is difficult to get rid of, inherited from the old days many years ago, when the conditions are quite different from those that are available today, and when scale of values ??and ethics, too, was different.

Stock market volatility reflect the views, opinions and the conditions of many thousands of people across the country and, indeed, in normal times, around the world

During that sends the market prices up or down, much stronger than any individual or group.