488 THE WORK OF THE STOCK EXCHANGE
mediately marketable, has long depended and will always
depend, the rate of progress and growth in American industry.
To the fact that the New York money market facilities for
carrying unsold securities have long been superior to those of
any other money market in the world, can be very largely at-
tributed the vast and healthy growth of industry in this as
compared with other countries.
American business corporations have recently been indebted
to the Stock Exchange for two other services of great im-
portance. Through financing with rights, they have been able
to raise hundreds of millions of dollars by the sale of additional
shares through the stock market; this fresh capital has been
variously employed to retire bond issues or commercial indebt-
edness and strengthen their capital structure, to acquire exten-
sive foreign and domestic assets, to install superior equipment,
and to provide themselves with ample working capital and
large cash assets. But in their new capacity of financial credi-
tors, the Stock Exchange has through its call loan market en-
abled them to invest cash surpluses safely and productively;
such loans “by other lenders” in 1929 aggregated $3,000,000,-
000 all told.*® Since the panic of 1929, these new tendencies
in American finance have been subjected to severe criticism,
some of which is undoubtedly justified. Yet this should not
lead us to overlook the very sound and constructive results
which have also flowed from them.
The Stock Exchange and Modern Banking.—Almost all
bankers are in one way or another investors or dealers in secur-
ities, and in consequence almost every variety of bank depends
in considerable measure upon the operation of the Stock Ex-
change. This fact was realized by the bankers themselves
with particular force during the critical autumn of 1914, when
the Exchange was compelled to keep its doors closed for sev-
eral months.
The precise contact of the given banker with the Exchange
depends, of course, upon the particular type of banking in
15 See Chapter XI, p. 283.
