260 THE WORK OF THE STOCK EXCHANGE
life of the syndicate agreements under which the new security
was issued.
The second section of the New York bond market is called
the “outside” or “over-the-counter” market, while its third
section consists of the bond market on the New York Stock
Exchange. The buying and selling in the “outside” market is
conducted primarily over the telephone between New York
bond dealers and brokers, with dealings also entering the mar-
ket by telegraph or long-distance telephone from other cities in
the country, or by cable from abroad; to a minor extent pub-
lished advertisements also play a part here. There is no defi-
nite membership in this “over-the-counter” market; the leading
New York participants in it are the insurance companies and
savings institutions, trust companies, commercial and invest-
ment banks, under certain conditions the Federal Reserve Bank
of New York, investment trusts and finance companies, indi-
vidual estates, foundations or private capitalists, and numerous
dealing and investment houses. Many member-firms of the
New York Stock Exchange engage exclusively, largely, or only
occasionally in bond dealings. The “outside” market, not being
really organized, operates rather by custom and special nego-
tiation than by enforceable rules and regulations. :
The growth of this “over-the-counter” market was facili-
tated by the development %of the telephone and the rise of
powerful investment companies and firms in New York. It
has become the great wholesale or jobbers’ market for bonds,
and is particularly notable for its large individual transactions.
Compared with it, the bond market in the Stock Exchange is
normally thin and concerned principally with retail transactions.
The development of the outside bond market was also due
to the stable price tendencies of most good bonds; since bond
prices do not fluctuate rapidly as a rule, there is time enough to
negotiate over the telephone without much danger of “missing
the market”’—which would happen if the same thing were tried
in active stocks. Thus a public and instantaneous organized
