STOCK EXCHANGE AND AMERICAN BUSINESS 487
guard, since it enables him to shift his investments to suit
his needs or sell them quickly in case of necessity.
Services of the Stock Exchange to the Manufacturer.
Turning next to the manufacturer, we have seen that economic
forces have favored the creation of large-scale corporations in
the industrial world,*® and that the Stock Exchange provides
an indispensable machinery for the gradual distribution of their
securities among investors.** Without a Stock Exchange
which makes it possible for speculators to carry the “floating
supply” of a particular stock and thus largely segregate and
stabilize the risks of industry as they exert themselves upon it,
the manufacturer himself would have to sustain the risk of his
company entirely alone, and probably have to go into the se-
curity business himself. In the swift and continual expansion
of American productive facilities to supply a steadily growing
demand, there is a constant tendency for manufacturing and
commercial firms to expand their small and closely owned com-
panies into large stock corporations with a greatly augmented
industrial equipment and output. This healthy and desirable
development of American manufacturing and commercial firms
calls for additional capital, which is mainly obtained by the dis-
tribution of the expanding company’s stocks and bonds to the
speculating and investing public through the free and open
market provided by the stock exchanges.
In recent years the experience of our manufacturers in this
respect is only a vivid and contemporary instance of the long-
established fact that the creation and operation of large units
of industry invariably necessitates the stock corporation with
its thousands of stockholding partners, and the stock exchange
where its stocks—which are only the certificates of such part-
nerships—can be readily bought and sold. Upon the ability of
the stock exchanges—and in this country, particularly upon the
New York Stock Exchange—to render stocks and bonds im-
13 See Chapter I, p. 15.
14 See Chapter IV, p. 108.
