WALL STREET PANICS

Taranaki Daily News, 21 November 1929, Page 20

WALL STREET PANICS

MANY NOTABLE CRASHES. HISTORY OF EXCHANGE. Panics and crashes have been a feature of Wall Street experiences from early times in its history. The earliest of the most severe crashes was in 1837, and there were others in 1857, 1873, and 1893. In 1873 the crash was so disastrous that the exchange was closed for ten days.. Wall Street has had a picturesque as well as a somewhat hectic history, says a writer in the Sun-News Pictorial. After the War of Independence, the National Government assumed control of the war debts of the States, and issued bonds to take them up. Banks were also organised, and investments in these bonds and bank shares created a demand for investment. Out of this, speculation developed. SALES UNDER THE TREE. As the result, brokers used to meet under a buttonwood tree near 68. Wall Street to buy and sell bonds and shares. For 25 years the stock market existed thus on the Wall Street kerb. The New York Stock Exchange was organised in 1817, and the stock market developed rapidly. Railroad stock was first dealt in in* 1830. The introduction of the telegraph and cable and of a national banking system expanded business enormously. . Stock indicators or “tickers,” by which quotations were recorded in every broker’s office simultaneously with the making of sales were adopted in 1807. j.’rent the Wall Street kerb the Stock Exchange flitted to. the Tontine Coffee House and then to the Merchants’ Exchange. A new stock exchange building was erected in 1!X)3. One of the most serious collapses occurred in December, 1895, when the New’ York and London exchanges were convulsed by President Cleveland’s Venezuelan message to England, a clause of which seemed to threaten war between England and the United States. Another panic occurred in May, 1901, when the Northern Pacific corner and panic caused a collapse in prices and established a record in selling of 3,336,695 shares. The membership of the exchange is limited to 1100 members. Vacancies only occur by death, resignation, insolvency, or expulsion for fraud. A seat can be transferred by sale, and proves a very valuable asset. Prices vary, being high in time of great speculative activity, and low’ in periods of stagnation. In 1871 a seat was worth £687. By 1885 the value had risen to £B5OO, but in the- dull year of 1890 fell back to £3250. In 194)1 and 1902 seats were sold at £20,000, but since then prices have risen enormously. Earlier this year, a seat was sold for £lOO,OOO. When the exchange meets there are no calls and no formalities of any kind. Members meet on the floor of the exchange room, and those having stock to buy or sell simply announce the fact by word of mouth. Prices fluctuate by one-eighth of 1 per cent., and no seller can offer stocks down more than oneeighth of a point at a time. TAPE TELLS THE TALE. In the board room are a number of posts on which the names of the niQve active stocks are posted, and transaction take place about these posts. All these tiansactioons, too, are verbal. The brokers simply record sales on paper pads, and comunicate them to their offices by telephone. As the sales are made, prices are obtained by a large •staff of official reporters, and are immediately recorded on the tape of. the stock indicator. The tape is a narrow ribbon of paper which feed itself .into the indicator. After receiving '"the printed impressions giving the sales and prices, the tape falls into a basket under the machine. Thousands of these machines are located in offices and hotels throughout the city. Securities not listed on the official exchange list are traded in on the Wall Street kerb, and this business, which requires 100 brokers, is often very active. Wall Street makes very searching inquiries into the financial support of any new stocks before they are allowed’ to be listed. The information obtained by the exchange is often much more detailed than that given to shareholders, but can always be inspected by the public.