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.