The work of the Stock Exchange

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Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter V. The dangers and benefits of stock speculation

Collection:: Economics Books

STOCK SPECULATION—DANGERS AND BENEFITS 131 Yet stock market profits usually are kept in the market rather than realized and employed for purchasing elsewhere. Also, financing before a stock market boom is apt to have been so extensive as to provide most of the capital which industry will require for some time, and in any case after a major liquidation of the stock market, funds soon become both cheap and abun- dant. Finally, the gloomy attitude sometimes engendered among business men by stock market crises, is frequently exag- gerated and will depart as speedily as it has arisen; in any case, the stock market, as far as it does influence business through psychology, is ordinarily a stimulating rather than a depressing factor. Actually, the serious depressions which have befallen Amer- ican business have arisen from over-production and usually over-high commodity prices, and large commercial inventories. The mercantile markets are not as highly organized as the Stock Exchange, nor can they as readily or quickly adjust themselves to over-production. Speculation in most raw or manufactured products or in real estate is much more danger- ous than speculation in securities, both because readjustment takes so long to effect, and also because the public standards of living are directly affected by it. In many trade depressions, after the preliminary crash caused in the stock market, there has occurred a second Stock Exchange crisis when the illiquidity and depressed prices of other forms of property have driven business men to liquidate securities. Here the Stock Exchange, by functioning as a shock absorber to the national credit structure,’ unquestionably performs a national service in counteracting the effects of com- mercial and industrial distress. Absorption of Credit.—The charge is also frequently made that speculation on the Stock Exchange absorbs undue amounts of credit, and that money needed for the production of goods is, on account of speculative activities on the Exchange, 8 See Chapter II, p. SS.

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