THE BOND MARKET

501

security market is at most times and with most issues not so
necessary in bonds as in stocks. But although prices are usually
 communicated quickly in the outside market to dealers not
parties to them, nevertheless facilities for public quotation are
very rudimentary, and practically confined to often inaccurate
newspaper quotations. Thus the bond market on the Stock
Exchange regularly serves as a guide to the usually larger
“over-the-counter” market, by reason of its highly perfected
price-quotation system. Leading outside dealers sometimes
make a market on the Exchange with relatively few bond sales,
in order to establish prices as a standard for larger dealings
outside. Also, these outside dealers sometimes accumulate
small pieces on the Exchange and sell them again as a large
block outside, or buy a large block outside and distribute jt
retail on the Exchange.
Due to the loose character of organization in the outside
market, the latter is really a “fair weather” market, and it often
proves incapable of maintaining dealings during periods of
heavy liquidation, or when bonds for any other reason become
specially active. At such times the main N ew York market in
bonds is transferred to the Stock Exchange, whose highly perfected
 organization enables dealings to continue there even
under very adverse and difficult conditions. For this reason it
is by no means true that the Stock Exchange bond market is
either unnecessary or unimportant, despite its comparatively
small dealings in normal times.

Evolution of the Stock Exchange Bond Market.— While
the proportionate importance of the Stock Exchange bond
market in the whole market for bonds in New York has considerably
 declined since 1900, nevertheless the vast growth of
the entire American bond business has resulted over this period
in a steady expansion both of its volume of trading and its
facilities.

Originally the Stock Exchange bond market was conducted
by “calls,” and although this system was superseded in shares