544 
APPENDIX 
period for which you have no analogy whatever in the case of industry, 
and much less in the case of the Stock Exchange.”—Testimony of 
Prof. O. W. M. Sprague of Harvard, in the La Follette hearings. 
Pp. 33-35. 
(ITf) In recent Federal government hearings, the barometric char- 
acter of the stock market was frequently alluded to. Mr. W. R. Burgess, 
Assistant Federal Reserve Agent in New York stated (Stabilization 
hearings, p. 1010) “. . . the most sensitive index of changes in the 
New York money market is, of course, the call loan rate.” Professor 
J. R. Commons declared (Stabilization hearings on amended bill, p. 
100), “The stock market is a speculation on what that future pros- 
perity is going to be, and we have enough of this situation to make 
it rather a consistent statement that in any period of rise and fall of 
prices the first market to be affected is that most elastic market, which 
is the stock market. It is going to hit there first; it is going to raise 
their prices first or cause them to decline first. They are a kind of a 
forecaster of what is to follow.” 
Speaking of the relationship between the stock market and general 
business conditions, Professor O. W. M. Sprague (La Follette Resolu- 
tion hearings, p. 54) declared, “I do not think that the evidence indi- 
cates that a decline on the stock exchange is an independent cause of 
business or industrial reaction. It is undoubtedly true that almost in- 
variably trade reaction is accompanied or perhaps preceded by decline 
on the stock exchange, but there are plenty of other instances when 
declines on the stock exchange have not been accompanied or preceded 
by declines in general business. If the undue advance in the price of 
securities is purely a credit matter, and business in general is in sound 
condition, the reaction in the market would not plunge the country 
into a period of business depression. I therefore reach the conclusion 
that the brokers’ loan evil is At the worst an evil of minor consequence, 
not one of such serious import that we need to sacrifice any other 
desirable interest in the community in order to hold that matter in 
leash.” 
CHAPTER III 
The Rise of the New York Stock Exchange 
(IIIa) “From 1792 to 1801 the number of banks increased from 
3 to 23, with a total capital of $33,550,000. A few fire and marine 
insurance companies had also been. organized. The supply of securi- 
ties available for investment and speculation made therefore quite a 
stock market. The following advertisement, which appeared in the