41
practical endeavor to invest funds. Nevertheless, it is some-
what difficult to classify even the leading beneficial functions
of the organized stock exchanges, because of their consider-
able number and constant inter-relations. Some of these func-
tions are only more intensified forms of what exists more or
less in any market, while still others are peculiar to organized
markets. Here the attempt will be made to deal with basic
functions only, and many minor services will be left for later
chapters to elaborate. The analysis is confined to stock ex-
changes, but in part, of course, applies also to exchanges for
oroduce or commodities.
ORGANIZED SECURITY MARKETS
1. Increased Safety of Dealings.—The higher organiza-
ion of a stock exchange greatly increases the safety with which
security dealings can be carried on, either by its own members
or by the public, through its collective regulations, facilities,
and discipline. Impossible for practical reasons in an unor-
ganized market, the collective adoption and enforcement of
rules are the first task of a stock exchange. Marketing prac-
tices upon it are soon standardized, and irregular or fraudu-
lent methods of dealing in securities are sternly stamped out.
The membership of the market becomes selective, and persons
of improper character or business associations are excluded
from it. Forged or fraudulent securities are barred from the
market. Insistence is placed upon honest quotations. In these
and countless other less important ways, the market in or-
ganizing as a stock exchange, becomes a collective force for
commercial integrity.
The national effect of this increased safety of dealings
created by stock exchanges is to foster security investment,
and to develop a broader, firmer, and more active securities
market. As its volume of trading increases, the public can
deal in the stock exchange through its member-brokerage firms
not only more safely but also as a rule more cheaply than in
a duller, less organized market. There is, in fact, the same
trend toward lowered costs through increased volume of activ-
