The New York Stock Exchange in the Crisis of 1914 (WWI Centenary Series) by Henry George Noble

Author:Henry George Noble [Noble, Henry George]
Language: eng
Format: epub
Tags: History, Military, World War I, Business & Economics, Corporate Finance, General, United States, 20th Century
ISBN: 9781473367432
Google: uymRDwAAQBAJ
Publisher: Read Books Ltd
Published: 2016-03-10T03:14:19+00:00

CHAPTER III

THE REOPENING OF THE EXCHANGE

The fact that the Stock Exchange closed on July 31st and did not reopen fully until December 15th, might lead to the supposition that the question of reopening was not taken up before December. Far from this being the case, the truth is that reopening began to be discussed immediately after the institution was closed. Within twenty-four hours of the closing the minority, who had not been at first convinced of the wisdom of that action, joined with the majority in urgently advising that the Exchange be not reopened soon. All through the month of August a growing anxiety over the possibility of some hasty action by the Exchange authorities showed itself among brokers, bankers, and even some government officials. For this anxiety there was never any basis, because the officers of the Exchange having exceptional means of knowing what the dangers were, had no intention of assuming the immense responsibilities of re-establishing the market without the backing and approval of the entire banking fraternity. Gradually the excited solicitude about a premature reopening subsided as the ultra-conservative attitude of the Exchange was understood, and this was followed ere long by the first symptoms of agitation for the establishment of some form of restricted market.

As we have already shown the restraints of July 31st were relaxed one by one with the lapse of time. First a market at or above the closing prices was organized under the Committee on Clearing House; then Committees to facilitate trading in listed and unlisted bonds were formed; and finally a market was provided for unlisted stocks. All these devices, however, while they brought about readjustment and diminution of strain, did not constitute a reopening of the Stock Exchange, and the restoration of that great primary market, in some restricted way, became more and more a subject of public interest and concern.

As we have seen, the fundamental reason for closing the Exchange was that America, when the war broke out, was in debt to Europe, and that Europe was sure to enforce the immediate payment of that debt in order to put herself in funds to prosecute this greatest of all wars. To use an illustration popular in Wall Street at the time, there was to be an unexpected run on Uncle Sam’s Bank and the Stock Exchange was the paying teller’s window through which the money was to be drawn out, so the window was closed to gain time. How to reopen this window in such a way as not to pay out any more money to the foreign creditor than would suit our own convenience was the problem which soon began to agitate many ingenious minds. As time went on plans for performing this difficult feat poured in upon the Committee of Five in constantly increasing volume, and they were frequently accompanied by a request on the part of their authors that, when adopted, the credit for their success be publicly attributed to them. An edifying confidence was thus shown in what were usually the most visionary of these schemes.

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