THE PERIOD OF SUSPENSION
During the same morning on which the momentous action of closing was
taken the Committee of Five met and elected the President of the
Exchange as their Chairman. The acute crisis was over, the danger of a
cataclysm had been averted, but the situation that remained was big
with problems full of menace and uncertainty.
Just what effect the closing of the market would have was a matter of
doubt. On all previous occasions when the facilities of the Exchange
had been inadequate, or had been shut off, an unregulated market had
established itself in public places and proceeded uncontrolled. Thus
during the Civil War, when the volume of speculation had completely
outgrown the limited machinery of the old Board of Brokers, a
continuous market developed partly in the street and partly in a
basement room called the "Coal Hole" and flourished during the day,
while in the evening it was continued in the lobby of the Fifth Avenue
Hotel. This market did more business than was done upon the Exchange
itself, and a few years after the War, many of its members, who had
organized into the "Open Board of Brokers," were admitted to the Stock
Exchange in a body. The suspension of business in 1873 was too brief
to allow of the formation of a market such as the above, but, while it
continued, cash transactions for securities were being carried on
every day in the financial district.
Would results such as these obtain on this occasion? Much depended
upon the length of time before the Exchange could re-open, but this in
itself was a problem for which no one could venture a solution. Again,
a vast volume of contracts made on July 30th had been suspended. How
long could the enforcement of these contracts be successfully
prohibited, and above all how long would the banks and financial
institutions which were lending money on Stock Exchange collateral
refrain from calling loans when they were deprived of any measure of
the value of their security? Over its own members the New York Stock
Exchange might exercise a rigid control, and it could safely be
assumed that the other Stock Exchanges of the country would cooperate
with it, but numberless outside agencies existed such as independent
dealers unaffiliated with exchanges, and auctioneers, any of whom
might establish a market. If declining prices were made through media
of this description, and the press felt called upon to furnish them to
the public, the closing of the Exchange might not suffice to prevent
panic and disaster.
Oppressed by these considerations, and by an appalling sense of
responsibility, the new Committee of Five began its labors in the
morning of July 31st. The first step decided upon was to communicate
with the Bank Clearing House Committee. Mr. Francis L. Hine, President
of the Clearing House, was invited to meet the Committee of Five which
he did, a little later in the day, and presented to them the
following statement of the action taken by the Clearing House.
"There was a meeting of the Clearing House Committee this morning
in view of the closing of the New York Stock Exchange. It was the
opinion of the Committee that the business and financial
condition of New York and the entire country was sound but that
the situation in Europe justified extreme prudence and
self-control on the part of the United States; that the closing
of the Stock Exchange was a wise precaution by reason of the
disposition of all Europe to make it the market for whatever it
wished to sell, and that in this country there was no occasion
for any serious interruption of the regular course of business,
either financial or mercantile."
After the retirement of Mr. Hine, the Chairman of the Committee on
Clearing House of the Exchange stated that all the checks given to the
Clearing House had been certified, and a notice was thereupon sent out
instructing members to call for their drafts at the usual hour. Thus
all the differences due on the day's transactions of July 30th were
settled, and a first encouraging step was taken. It was also decided
to permit the offering of call money on the floor of the Exchange.
The Committee held its second meeting on August 1st and the first of
the long series of problems growing out of the closing of the market
was at once presented to it. A letter from a brokerage house doing
business with Europe was received in which it was pointed out that
"arbitrageurs" who had sold stocks in New York and bought them in
London during the previous fortnight had made their deliveries by
borrowing stock in New York; that the stock purchased in London was
due to arrive on this side, and that the usual process of financing
it by returning the previously borrowed stock had been cut off through
the suspension of unfulfilled contracts. This was likely to lead to
very grave embarrassment because call money had practically
disappeared and houses to whom this foreign stock was consigned might
not be able to meet their obligation to pay for it as it arrived.
There being no arrivals of foreign stock expected that day, the
Committee deferred action, and thus gained time to think out ways and
means of meeting the difficulty.
The second problem presented came in the form of a request for
permission to sell securities outside of the Exchange. The firm of S.
H. P. Pell & Co. had suspended, and a house which had been lending
them money wished to be authorized to sell out the collateral. This
was the first of many cases brought before the Committee, during its
long tenure of office, in which individuals sought for a special
privilege to sell securities they were anxious to market while trading
in general was forbidden. In this case the applicants were referred to
that section of the Constitution of the Exchange in which it is
provided that members having contracts with insolvents shall close out
these contracts in the Exchange when the securities involved are
listed. The Exchange being closed, this provision answered the
question without necessitating any independent action on the part of
the Committee.
* * * * *
From the moment of the closing of the Exchange a growing pressure
arose to determine just when and how it should be re-opened. The
desire for information on this point was widespread, and when the
gravity of the situation became clearer to the community, a great
anxiety developed that the re-opening should, above all, not be
premature. Realizing that the fear of sudden and ill considered action
on this question was becoming dangerous to the restoration of
confidence, the Committee of Five, at its meeting of August 3rd
authorized the following statement.
"Announcement is made by the President of the Stock Exchange, in
answer to inquiries as to when the Exchange will open, that ample
notice of such opening will be given."
In spite of this notice fear that the Stock Exchange might act
injudiciously lingered for some time longer until the constant
reiteration by its officers of their intention to act only in
conjunction and in consultation with the banks permanently allayed it.
By Monday, August 3rd, a steady stream of letters had begun to pour in
upon the Committee asking advice and direction upon any number of
questions raised by the closing of the market, and offering every kind
of suggestion and advice. In addition to this it soon became evident
that interviews would have to be held with large numbers of people for
the purpose of securing their cooperation, influencing their conduct,
and obtaining information. The resolution of the Governing Committee
by virtue of which the Committee of Five was brought into being merely
stated that questions such as these should be considered and reported
back "at the earliest possible moment." Clearly here was an impossible
situation. The immense detail of the work which was beginning to
unfold itself could never be handled by so large a body as the
Governing Committee itself. Realizing that this difficulty must be met
without a moment's delay the Committee of Five requested the calling
of a special meeting of the Governors for twelve o'clock the same day
and presented to them the following resolution, which was unanimously
adopted.
"RESOLVED: That the Special Committee of Five, appointed by the
Governing Committee on July 31st, be, and it hereby is,
authorized during the present closing of the Exchange, to decide
all questions relating to the business of the Exchange and its
members."
This action of the Governing Committee, while it was rendered
necessary by the peculiar requirements of the situation, was
unprecedented in the history of the Exchange, for never before had
such powers and such responsibilities been put in the hands of so few
individuals. It was one of a series of "war measures" by means of
which ends were achieved that would not have been reached in any other
way.
Clothed with complete authority the Committee met again in the
afternoon of August 3rd and was at once confronted with a request for
a ruling on the question of how far members were to be restrained from
dealing outside of the Exchange. After a lengthy discussion the
following was approved as their opinion.
"It was the intention in closing the Stock Exchange that trading
should be stopped and it is the duty of loyal members to comply.
If cases come into your office where it is absolutely necessary
to trade, do so as quietly as possible and prevent the quotation
from being published."
It will be noticed that the policy adopted here was less stringent
than what came later when the growth of an outside market increased
the dangers of the situation.
* * * * *
With the question of outside dealings there at once arose the closely
connected question of the danger arising from having price quotations
of such dealings made public. The quotation machinery of the Exchanges
had been silenced by the closing of those institutions, but there
remained the public auctioneers whose sales, if they took place, would
be disseminated by the press and might spread panic among security
holders and money lenders. The auctioneers in New York, Boston,
Philadelphia, and Chicago were at once approached, not only directly
but through their bankers and other advisers. It was a disagreeable
task as these auctioneers had to be urged to cease doing business, but
it was rendered unexpectedly easy by the courtesy and friendliness
with which they cooperated for the general welfare. So loyal were
these various agencies that not a single sale, either of listed or
unlisted securities, occurred in any auction room of the country until
the urgent phases of the crisis had passed.
It was not in auction rooms alone, however, that prices might be made;
dealings were liable to occur in any unexpected locality, and it was
urgent that prices of an alarming character should be kept from the
public. For this most important purpose the cooperation of the press
was absolutely necessary. To obtain this, at the outset, was no easy
matter. The closing of the Stock Exchange placed the financial news
writers of the daily press in a curious position. With them were
allied that group of financial writers connected with the various Wall
Street news agencies, the several financial journals that are
exclusively devoted to Wall Street affairs, and the financial
correspondents of out of town newspapers. All told there were about
one hundred salaried men in these various groups, men experienced in
financial affairs, widely known and respected, engaged in a work which
had never been interrupted and which, as far as could be foreseen,
promised to furnish them with a continuous vocation.
The first effect of the war was a general curtailment of newspaper
advertising, a rise in the price of paper, and a greatly increased
cost of the news of the day owing to excessive cable charges for
foreign dispatches. Thus the newspapers suffered a rapidly diminishing
revenue, and they found it necessary to discharge many of their
employees and to reduce the salaries of others. With the Stock
Exchange closed, naturally the salaried financial writers were among
the first to feel this hardship.
Those whose services were retained throughout this crisis were
confronted with divided responsibilities. It was their duty to
interpret a mass of more or less fantastic rumors at a time when
nerves were overwrought and points of view magnified and distorted.
They wished to prevent the publication of anything of an incendiary
nature, while at the same time a necessity arose for presenting to the
public the news to which it was entitled. Placed in such a position
there was a very natural impatience here and there to have the
Exchange reopened, while now and then a tendency became manifested to
publish certain news of the day which, while interesting to the
public, tended to handicap the efforts of those bent only on
reassurance and calm counsel. At times it became somewhat difficult to
prevent the publication of some of these matters, particularly of the
prices made in the so called "gutter" market which sprang up in New
Street. And yet on the whole nothing could have exceeded the fairness
and the spirit of cooperation of these gentlemen in this trying time.
One newspaper even went so far as to cease the publication of a
remunerative page of small advertisements having to do with dealings
in outside securities. This was done at the request of the Committee
without hesitation. Others cooperated in the suppression of
advertising on the part of questionable people, while correspondents
of out of town newspapers, both foreign and domestic, cheerfully
acceded to requests to suppress all disturbing financial reports. In a
word, the financial department of the whole newspaper press accepted
the situation philosophically, bearing their losses without complaint
and supporting without cavil the restrictive measures which it was
necessary to employ.
This loyal conduct of the press and of the auctioneers was one of the
great factors without which the critical days of the suspension of
business could not have been successfully surmounted.
* * * * *
It will be remembered that in the morning of July 31st, the Governing
Committee not only voted to close the Exchange but also declared that
the delivery of securities should be suspended until further notice.
The motive of this latter action was to prevent the possible
insolvencies that were likely to be forced if purchasers were
compelled to pay for their securities in the absence of a call money
market. At the earliest moment that attention could be given to it the
Committee of Five requested the Chairman of the Stock Exchange
Clearing House to place before it the exact figures of the outstanding
contracts. These figures when presented showed that there were stock
balances open on Clearing House order amounting to $38,700,000 and
Ex-Clearing House contracts amounting to about $61,000,000. Roughly
speaking there had been about $100,000,000 of stock sold in the
Exchange on July 30th, the delivery of which to the purchasers had
been suspended by the action of the Governing Committee. Obviously a
first great step toward clearing up the situation and preparing the
ground for the ultimate reopening of the market was to get this great
volume of contracts settled, so that if any failures were inevitable
they would be disposed of beforehand.
It being probable that many of the purchasers of stock on July 30th
were in a position to finance their purchases even in the midst of the
crisis the Committee deemed it wise to offer every possible facility
for the immediate settlement of contracts when the purchaser was in
this position. They therefore issued the following notice on August
4th:
"The Special Committee of Five appointed to consider questions
connected with the closing of the Exchange state that the
resolution of the Governing Committee suspending deliveries
until further notice does not mean that settlement may not be
made by mutual consent wherever feasible. The Clearing House of
the Exchange is prepared to advise and assist, and inquiries
should be made in person there."
At the request of the Committee of Five the Committee on Clearing
House at once undertook the task of assisting members of the Exchange
in closing up these contracts and used its clerical force for that
purpose, thus involving much careful and detailed work. They held
daily continuous meetings, giving their personal attention in
assisting members, and using a care that involved both tact and
arduous labor. Through their efforts such extraordinary progress was
made, in this complex and difficult task, that by September 22nd
announcement was made that the delivery of all Clearing House balances
had been completed with the exception of those of the few firms whose
affairs were in the hands of receivers. These were settled shortly
afterwards and at the same time the great volume of Ex-Clearing House
contracts were also completely fulfilled.
This is one of the most extraordinary and gratifying experiences of
the great crisis. In about seven weeks, at a time when money was
unobtainable and the condition of panic was at its height, this huge
volume of unsettled contracts was met and consummated by voluntary
cooperation and without compulsion of any kind. In some few cases
selfishness or indifference delayed action on the part of individuals,
but these were all brought to a final adjustment by the influence and
persuasion of the Committee.
This achievement not only reflects undying credit upon the members of
the Exchange by showing both the sound condition of their business and
their zeal to act for the general welfare, and creates a deep sense of
obligation to the Clearing House Committee who for many long weeks
worked unceasingly to overcome the difficulties that beset the path,
but it justifies and confirms the wisdom of the New York Stock
Exchange in adhering to the practice of daily settlements. In all the
great European centers, where trading on the fortnightly settlement
basis is in vogue, the restoration of dealings was terribly
complicated by the herculean task of clearing up back contracts that
extended over many days. In New York, when conditions so shaped
themselves as to warrant reopening the Exchange, the back contracts of
its members had all been settled up _two months_ before. Had our
system, like the European, involved "trading for the account," every
additional day of back contracts added to the $100,000,000 worth of
July 30th would have stood in the way of a final settlement, and the
reopening of the market (which was long postponed as it was) would
have been much further delayed.
* * * * *
On August 4th, a problem which had loomed upon the horizon the day
after the closing of the Exchange, was brought squarely before the
Committee. A delegation of houses dealing in securities for European
account appeared and stated that approximately $40,000,000 to
$50,000,000 of securities were to arrive "this week, beginning
to-morrow, Wednesday," and that they would be accompanied by sight
drafts which would have to be financed. This alleged great volume of
securities had been sold in this market for foreign account and
borrowed in New York in order to make the immediate deliveries that
our day to day system requires. The suspension of the fulfillment of
contracts declared by the Exchange made it impossible to return this
borrowed stock, and the houses doing this business were therefore
obliged either to allow the drafts to go to protest or finance the
incoming stock until the free enforcement of contracts was again
permitted.
With money practically unobtainable, and general panic prevailing, it
is needless to say that these statements of the delegation of houses
doing foreign business were a severe shock to the Committee of Five. A
remedy proposed by one or two of these banking houses was that the
people from whom they were borrowing stock should be required to take
it back. This simple expedient, while eminently satisfactory from the
standpoint of the borrower of stock, was not very helpful to the
Committee, as it would merely have shifted the problem of financing
the stock from one set of brokers to another, and would have raised
the dangerous question of a general enforcement of contracts in
borrowed securities. It was an interesting illustration, among some
others to be subsequently experienced, of the manner in which certain
minds can become entirely absorbed in that aspect of a question which
deals solely with personal interest. After careful discussion it was
determined that the cooperation of the Clearing House banks should be
sought in solving the difficulty. The Committee of Five thereupon
sent a communication to the Bank Clearing House committee setting
forth all the circumstances connected with the expected consignment of
securities as stated by the delegation of banking houses and requested
an appointment to meet them, or a sub-committee of their members, and
discuss the matter. The appointment was obtained for the following
morning, August 5th, and the Chairman and Mr. H. K. Pomroy were
appointed a sub-committee to confer with the Bankers and directed to
take Mr. Richard Sutro with them as a representative of the houses
doing foreign business.
At the meeting with the Clearing House bankers it was very properly
decided that a solution of the problem could only be reached when an
exact knowledge of the amount of money required to pay for the
incoming securities had been obtained, the figures stated by the
banking houses which were seeking assistance being only estimates. The
representatives of the Stock Exchange agreed to obtain this exact
information at once, and having returned and stated the circumstances
to the Committee of Five, it was directed that the following
communication be sent to a list of members of the Exchange who, it was
understood, were to have foreign drafts presented to them:--
"The Special Committee of Five requests that by three o'clock
to-day they may have in their possession from you information as
to the number and amount of drafts which you expect will be
presented to you from Europe on any steamers arriving to-day or
subsequently. They would particularly like to know how much you
expect on each steamer. In case any of these have already been
financed please so state in your communication.
"The Committee would also like to have you tabulate in your
reply, so far as you can, the banks, trust companies or bankers
from whom you expect drafts to be presented.
"This communication is confidential and it is requested that you
do not discuss this matter with any one outside your own firm.
Your answer is expected by bearer, in order that the financing of
these drafts may be facilitated."
By three o'clock, the same afternoon, replies had been received from
thirteen houses that they expected securities on the _Olympic_ and
_Mauretania_, and had also received advices of other securities
forwarded but did not know on what steamers; the drafts to be
presented they said would be approximately for four and one half
millions. Replies from twelve other houses stated it as a possibility
but not a certainty that securities might reach them on the steamers
above mentioned to the amount of about four millions; and, finally,
twelve firms sent replies stating that they either expected no
securities or had made the necessary arrangements to finance what was
coming. These facts--so far below the estimate at first presented to
the Committee--came as a great relief, and were at once taken before
the Bank Clearing House Committee. After a careful discussion with
these gentlemen the Committee of Five again met and sent the following
communication to the firms who had reported that securities and drafts
were about to be tendered to them.
"Members of the Exchange to whom foreign drafts are presented for
payment, are requested to confer with the Committee of Five at 9
A.M. to-morrow, Thursday, the 6th inst., in the Secretary's
office, with details of such transactions in hand, when efforts
will be made to facilitate the adjustment."
The next morning the few firms who had drafts to meet on that day were
provided with the necessary loans by two banks and a trust company at
8 per cent. The amount of securities due from Europe was undoubtedly
large, but the great bulk of it had not been shipped and the shipment
of it was postponed for many weeks afterward. The extraordinary
statement that $40,000,000 or $50,000,000 were about to be landed in
New York is interesting as showing the hysterical state of mind to
which many business men had been reduced at that time. The actual
amount of stocks sold to arrive, against which borrowings had been
effected in New York, was finally shown to amount to $20,000,000. That
this amount was not increased at an embarrassing period in these
important negotiations was due in large measure to the action of the
Committee in calling together the various foreign arbitrage houses,
and securing from them an agreement to cable to their correspondents
in Europe not to make further shipments of securities, because
borrowed stocks could not be returned and deliveries effected. This as
it turned out was an important step in the right direction.
* * * * *
Owing to the sudden and severe pressure of business to which the
Committee of Five was subjected almost from the moment of its
organization, some matters were unavoidably overlooked which should
have had immediate attention. Conspicuous among these was the question
of the rate of interest to be charged upon open contracts which the
action of the Governing Committee had suspended. This matter was not
reached until the meeting of August 4th, when the following ruling
was made:
"The Special Committee rules that interest on the delivery at the
rate of 6 per cent. shall accrue from August 5th on all unsettled
contracts for delivery of securities, except that interest shall
cease when a receiver of securities gives one day's notice to a
deliverer that he is ready to receive and pay for same.
"The Special Committee further rules that sales of bonds on July
30th carry interest at the rate specified in the bond to July
31st, and that between July 31st and August 5th they are 'flat';
interest thereafter to be 6 per cent. on the amount of money
involved, subject to the exemption stated in the previous
ruling."
In view of the fact that no action had been taken up to August 4th and
that a number of private settlements had been arranged in the meantime
the Committee thought it wise to avoid a retroactive ruling, and
imposed the 6 per cent. rate from August 5th. Injustice was done, in
some cases, by permitting a lapse of five days when no interest charge
was required, but this injustice was cheerfully borne owing to the
unusual exigencies of the situation.
On this same day the Committee received the first communication which
indicated that some members of the Exchange had not yet appreciated
the necessities and dangers of the situation. This came in the form of
a letter from the Baltimore Stock Exchange which contained the
following passage:--
"A representative New York Stock Exchange house has been guilty
of going directly to one of the Trust Companies here, and made
offerings of bonds dealt in on both your Exchange and our own, at
a large concession."
The Committee directed the Secretary to make the following reply:--
"In the matter of your letter of August 1, 1914, I am instructed
by the Special Committee appointed by the Governing Committee on
July 31, 1914, to inform you that in the opinion of said
Committee the offering down of securities in places where money
is loaned on securities is most reprehensible, and that members
of this Exchange ought not to engage therein. If possible, I
would like the name of the member of the New York Stock Exchange
who made such offer."
It may be urged in extenuation of the act of the Stock Exchange house
that, August 1st being only one day after the closing, a thorough
appreciation of the gravity of the situation had not yet become
general.
* * * * *
By August 5th the work of the Committee had assumed the form that was
to continue unremittingly until the Exchange reopened four and one
half months later. A constant stream of communications either by
letter or by personal appearance filled the days sometimes from nine
o'clock in the morning until six in the afternoon. The communications
asked advice and made suggestions of every conceivable kind, but,
above all, they were loaded with problems and difficult situations
which had grown out of the breakdown of the financial machinery in
general.
The labors of the Committee in striving to straighten out this
formidable tangle of business affairs led to their issuing a series of
rulings, which were binding upon all members of the Exchange. These
rulings were sent over the "Ticker" whenever they were passed, but on
August 5th it was decided to supplement the "Ticker" by distributing
the rulings in circular form, and thus insure the possession by every
member of a full copy of the entire number. It is a gratifying fact,
both from the standpoint of the Committee and of the Stock Exchange,
that no one of the very numerous rulings was a failure or had to be
rescinded, and that they were all accepted without cavil or serious
criticism by the members. In the relatively few cases where an
indisposition to live up to these rulings was brought to the attention
of the Committee, an appeal from them to loyalty and good judgment
never failed to bring a recalcitrant member to terms.
On this day, August 5th, a special circular was sent out to answer the
constant inquiries as to whether purchases or sales of securities were
in any way permissible during the period of closing. It contained the
following:
"When the Governing Committee ordered the Exchange closed it was
their intention that all dealings in securities should cease,
pending the adjustment of the financial situation and the
reopening of the Exchange.
"It is possible that cases may occur where an exception would be
warranted provided such dealings were for the benefit of the
situation, and in no sense of a speculative character, or
conducted in public. Any member, however, taking part in such
transactions must have in mind, his loyalty to the Exchange,
whether or not he is living up to the spirit of the laws, and
that he is not committing an act detrimental to the public
welfare."
On August 7th the question of the reopening of the Exchange again came
to the front. A letter from Baltimore was received urging that the
Exchange reopen for dealings in bonds only, and the newspapers were
so urgent for some statement on the subject that the Committee
authorized the following:
"The Special Committee of Five will not recommend to the
Governing Committee the reopening of the Exchange until in their
judgment the financial situation warrants it, and as before
stated, ample notice will be given of the proposed opening."
The question of borrowed and loaned stocks came up at this time in two
aspects, one the interest rate to be charged, and the other the
determination of the market price at which such loans should stand.
With regard to the former the Committee ruled on August 5th that
"until further notice, from and after this date, the interest rate on
all borrowed and loaned stocks shall be 6%." In the latter case they
ruled (August 10th) that "borrowed and loaned stocks must be marked to
the closing prices on Thursday, July 30th, 1914, at the request of
either party to the loan."
The effect of this second ruling was to establish the policy of
regarding the closing prices of July 30th, as the market for
securities, so that all loans, whether cash loans or stock loans,
should be figured at this level. The making of any prices below those
of July 30th was to be resisted by every available means, and the
money-lending institutions were to be urged to cooperate by
recognizing them as a basis for exacting margins. As long as this
policy could be successfully carried out the danger of financial
collapse would be averted.
It having been ruled that a lender of stock, by notifying the borrower
of his willingness to take the stock back, could stop the interest
charge on the contract, a considerable demand arose for new stock
loans to replace those in which this privilege had been exercised. The
matter of facilitating these new stock loans was taken up by the Stock
Exchange Clearing House, and this together with the negotiations for
voluntary settlement of back contracts now brought upon the Clearing
House Committee that great volume of work which increased steadily
until the reopening of the Exchange.
One step tending to increase this work was taken on August 11th, when
the Committee ruled as follows:
"Whenever a loaner of stocks gives one day's notice of
willingness to have the same returned and the borrower fails to
so return, the interest thereon shall cease. The Clearing House
of the Exchange is prepared to advise and assist in making new
stock loans and inquiries should be made in person there."
The effect of this ruling was to create a borrowing demand for stocks
at current interest rates and the Clearing House Committee became the
agency through which these stock loans were negotiated.
A further ruling, on August 11th, relative to the interest rate was to
this effect:
"That on all loans of stock made between members after this date
the rate of interest is subject to agreement between the parties
to the transactions, but should not exceed 6 per cent."
By the eleventh of August the question of the growth of an outside
unregulated market began to force itself upon the attention of the
Committee. All the organized Stock Exchanges of the country were
closed, the auctioneers had loyally agreed to abstain from making
sales, the "Curb" or recognized outside market was faithfully
cooperating to prevent dealing, the unaffiliated bankers and money
institutions were refraining even from the private sale of bonds in
which they were interested, so that for a brief period there was a
practically complete embargo on the marketing of securities. Naturally
enough, so absolute a restraint brought on a pressure which was bound
to force a vent somewhere. At first an occasional group of mysterious
individuals were seen loitering in New Street behind the Exchange. A
member of the Committee of Five, who was prone to see the humorous
side of things even in those dark days, remarked as he observed them
late one afternoon "the outside market seems to consist of four boys
and a dog."
Before long, however, this furtive little group developed into a good
sized crowd of men who assembled at ten o'clock in the morning and
continued in session until three in the afternoon. At first they met
immediately outside of the Exchange, but later they took up a position
south of Exchange Place and close to the office of the Stock Exchange
Clearing House. Their dealings increased gradually as time went on and
never ceased entirely until the Exchange reopened. In all probability
the existence of this market was a safeguard as long as its dimensions
could be kept restricted. An absolute prohibition of the sale of
securities, if continued too long, might have brought on some kind of
an explosion and defeated the very end which it was sought to
achieve.
This irregular dealing, as long as it remained within narrow limits
and was not advertised in the press, furnished a safety valve by
permitting very urgent liquidation. It was, however, continually
accompanied by the great danger that it might grow to large and
threatening proportions. If, in consequence of the facilities which
these unattached brokers were offering, responsible interests should
begin to take part in and help to create an open air market, the very
disasters which the closed Exchange was intended to prevent might be
brought about.
It was necessary, therefore, that the Stock Exchange authorities
should do all in their power to hold the development of this market in
check. With this end in view they not only prohibited their own
members from resorting to it, but they exerted what influence they
could upon others not to lend it their support. The banks and money
lenders were urged not to recognize the declining prices which were
established there as a basis for margining loans, as such recognition
might tend to increase the dealings. One or two large institutions
which, at first, were disposed to finance the operations conducted in
the Street were persuaded to refrain from continuing to do so, and the
press, while giving publicity now and then to the very low figures at
which some leading stocks were quoted, was induced to avoid the
practice of regularly tabulating these prices.
It having become apparent that some members of the Exchange, while
obeying the mandate to do no trading in New Street, were indirectly
helping the practice along by clearing stocks for the parties who
were making the market there, the Committee ruled (August 11th) "that
members of the Exchange are prohibited from furnishing the facilities
of their offices to clear transactions made by non-members while the
Exchange remains closed."
The final outcome was that the New Street market did more good than
harm. It relieved the situation by facilitating some absolutely
necessary liquidation, and never grew to such proportions as to
precipitate disaster, but during the long suspense and uncertainty of
the closing of the Exchange it was a constant and keen source of
anxiety to the Committee of Five.
* * * * *
Toward the end of the first fortnight after the closing of the
Exchange, the communications received by the Committee made it plain
that there were quite a large number of purchasers, attracted by the
low figures reached in the last day's trading, who were ready and
anxious to buy securities at or above the closing prices. Obviously
purchases of this kind by investors who happened to be in a position
to take securities out of the market, promised to bring relief to
interests whose position was critical and thus to fortify the general
situation. This facility could not be extended in the form of a
general permission to the members of the Exchange to make transactions
privately at or above closing prices. To have permitted as far
reaching a relaxation of restraint as this in so critical a time would
have entailed too great a risk. If any one of the eleven hundred
members had proved disloyal in the exercise of so dangerous a
privilege and privately negotiated sales at prices below those of the
closing, the whole plan of sustaining values might have been
jeopardized.
After considering the matter very carefully the Committee concluded
that the machinery and clerical force of the Stock Exchange Clearing
House could be advantageously used to supervise and control
transactions of this character, and, on August 12th, they issued the
following ruling:
"Members of the Exchange desiring to buy securities for cash may
send a list of same to the Committee on Clearing House, 55 New
Street, giving the amounts of securities wanted and the prices
they are willing to pay.
"No offer to buy at less than the closing prices of Thursday,
July 30, 1914, will be considered.
"Members of the Exchange desiring to sell securities, but only in
order to relieve the necessities of themselves or their
customers, may send a list of same to the Committee on Clearing
House, giving the amounts of securities for sale.
"No prices less than the closing prices of Thursday, July 30th,
1914, will be considered."
Thus was established a market in the Stock Exchange Clearing House
which was kept in operation until the complete reopening of the
Exchange. Immense labor and difficulty were brought upon the Clearing
House Committee in order to handle and supervise this unusual method
of trading, and the extraordinary success with which it was carried
through has entitled them to the lasting gratitude of their fellow
members. The business was conducted by having a large clerical force
tabulate the orders received and bring purchasers and sellers together
who were willing to trade in similar amounts and at similar prices. In
order to consummate a trade the Clearing House would notify both
parties, leaving it to them to carry out the delivery and payment, and
requiring them to inform the Clearing House when the transaction had
been completed.
* * * * *
The first effect of furnishing this means for establishing a
restricted market was very encouraging. A very considerable amount of
business began at once to be entered into. Many people with ready
money, who felt that securities had fallen to bargain prices, appeared
as purchasers and relieved the necessities of those who had been
embarrassed by the war crisis. A little later, however, when the
progress of the war took on a more discouraging aspect, this "Clearing
House Market" fell to the arbitrary minimum of the closing prices with
a large excess of selling as compared to buying orders, and the "New
Street Market" grew in proportion. During the darkest days of
depression the prices of a few leading stocks such as U. S. Steel and
Amalgamated Copper dropped in the Street ten points or more below
their July 30th closings, and business in the Clearing House almost
ceased, but in the later Autumn, when the rapid rise in the volume of
American exports began to foreshadow a readjustment in foreign
exchange, the New Street prices rose again to the Clearing House level
and a relatively small business in the "outlaw" market was transformed
into a relatively large business conducted under the supervision of
the Exchange.
It is an interesting detail, worth mentioning, that the ruling of the
Committee quoted above, which established a market in the Clearing
House, used the permissive word "may" in stating that orders to buy
and sell might be sent to that institution. This was soon taken
advantage of by a few individuals who proceeded to conduct private
transactions among themselves. Their excuse was that if transactions
were merely permitted in the Clearing House it became optional as to
whether they should take place there or elsewhere. Within a few days
thereafter the Committee amended the ruling by substituting the word
"must" for the word "may." The great responsibility attached to
promulgating rulings, which were to be the law during this critical
period, is made more apparent when it is realized that the ill
considered use of a single word might bring on unforeseen and perhaps
dangerous consequences.
During the month of August a constantly increasing pressure from every
conceivable direction was exerted to break down the dam with which the
Committee was striving to hold back the natural flow of dealings in
securities. By letter and by personal appearance before the Committee
individuals, in and out of the Exchange, strove to induce them to
countenance transactions at prices below the arbitrary level of the
closing. In addition to this agitation among individuals and firms,
restlessness began to show itself in some of the other Exchanges. At
one time the Stock Exchange of a great neighboring city, which had
permitted restricted dealings exactly similar to those carried on in
New York, wished to have those dealings regularly quoted in the
newspapers; at another time a movement developed on the Consolidated
Stock Exchange to establish some kind of restricted public dealing on
their floor. The Committee of Five were obliged to labor hard and
assiduously to hold this pressure back and keep the dam intact, and
its efforts were ably and loyally seconded by the Committee of the
Bank Clearing House whose great influence was unremittingly exerted to
prevent the danger of premature action of any kind.
On September 1st the Clearing House banks were anxious to determine
what was the amount, measured in money, of securities sold in New York
by Europe and not yet received. The object of obtaining this
information was to know what demand would be made upon the loan market
if, at any time, these securities should be shipped. At the
suggestions of the bankers the Committee of Five summoned before them
representatives of all the houses doing a foreign business and
requested them to send answers, as promptly as possible, to the
following two questions:
_First:_ "Amount due Europe for securities received to date and
not yet paid."
_Second:_ "Amount due Europe for securities already sold but not
received from Europe."
On the following morning answers were handed in showing that the
amount received and not yet paid for was $699,576.11, and that the
amount due Europe on securities sold but not yet received was
$18,236,614.15. The rapidity and accuracy with which this important
information was obtained, without any publicity or disturbance of
confidence, is interesting as showing the efficiency of the intimate
cooperation between the banks and the Stock Exchange.
* * * * *
Among the many agencies for dealing in securities, whose activities
were suddenly cut off on July 31st, the first in importance next to
the Stock Exchanges themselves were the so-called bond houses. These
firms, which included in their number many prominent private bankers,
were dealers on a great scale in investment bonds, and when the
thunderbolt of war struck they were carrying large lines of those
bonds on borrowed money which, in the ordinary course of events, would
have been placed among their numerous clients. When the crisis of
early August had developed, all these houses (some of them not being
members of the Stock Exchange) loyally cooperated in closing up the
market, and abstained from negotiating their securities even in the
most private manner. By the middle of August, however, a number of
them began to show decided restlessness over the embargo upon their
business. The cutting off of their accustomed income, while expenses
continued as usual, was not what influenced them, for this hardship
was shared by all Wall Street, but the enforced carrying of securities
in bank loans at so critical a time when they felt that these
securities might be disposed of became a grievance.
It was urged by many of them that the careful placing of these
securities would be a great aid to the situation because every
investor who made a purchase would facilitate the liquidation of their
loans, ease the strain on the money market, and diminish the volume
of securities for sale. There was undoubtedly much to be said in favor
of this view when looked at from the standpoint of the effect upon the
bond houses themselves or upon the loan market, but there was another
aspect of the question which was less reassuring. If these houses
started, at this terribly critical time, to place their securities
among their clients at declining prices, and if these prices became
known, which they certainly would, no one could foretell what the
consequences might be. Many large institutions, such as Insurance
Companies and Savings Banks, had funds invested in bonds, and many
money lenders held loans upon bonds as security; what would be the
effect upon these interests if a declining market even in unlisted
bonds should be publicly quoted?
Influenced by this grave uncertainty the Committee of Five resisted
the pressure brought upon them by certain representatives of the bond
dealers who raised this question first on the nineteenth of August.
Several of these gentlemen represented important firms and
institutions which were not members of the Exchange, and their freedom
from any obligation to be controlled by the Committee created a
situation which threatened to become strained. In all cases of this
kind, where an independent outsider and the Committee could not come
to an understanding, the practice had become established of appealing
to the Clearing House Bankers to act as a court of last resort. The
banks, with their power to call loans, exerted an influence which
could reach every nook and corner of the business world, and, at the
same time, their immense facilities for feeling the financial pulse
made them the best judges of what risks it was as yet safe to take. A
series of meetings consequently took place between the Bank Clearing
House Committee, the representatives of the bond houses, and the
Committee of Five. At the first of these meetings the bank Presidents
leaned very decidedly to the views of the Stock Exchange, and it was
decided to postpone any consideration of a departure from the status
quo for at least a fortnight.
The general situation remaining very critical all through August, no
further steps were taken until September 8th. By that date a new
factor had intruded itself into the situation. Certain corporate
obligations were about to come due and the refunding of these
obligations, whether in fresh issues of bonds or in short term notes,
was going to make it necessary to withdraw the prohibition against
placing investment securities upon the market. When this necessity
became clear it was decided that some strict supervision and
safeguarding of the sale of bonds and notes was necessary and the
so-called "Committee of Seven," appointed by the bond dealers, were
requested to formulate a plan for this purpose. This Committee of
Seven consisted of members of the firms of: Brown Brothers & Co.;
Guaranty Trust Co.; Harris, Forbes & Co.; Kissel, Kinnicutt & Co.; Wm.
A. Read & Co.; Remick, Hodges & Co., and White, Weld & Co.
On September 9th, this Committee issued the following notice to bond
dealers:
"Your Committee is pleased to report that New York City's
financial needs have been taken care of satisfactorily, thereby
considerably clearing the foreign exchange situation which
existed when our communication of September 3d was sent out.
"The Committee is therefore of the opinion that the placing of
securities owned by dealers with their private customers should
be approved where the securities can be sold without disturbing
the collateral loan situation and your Committee will be glad to
continue to advise whenever such opportunities arise. Anything
tending toward public quotations or the creating of the
impression of an active or even semi-active market would
unquestionably seriously disturb the loan situation.
"Transactions with bargain hunters should not be countenanced and
your Committee will not approve the closing of transactions
coming under this head. Prices should conform to the spirit which
has prevailed during the past few weeks.
"Recognizing the support which banks and other lenders of money
have given to dealers in securities, it should be the policy of
such dealers when securities are sold to apply the proceeds
toward the liquidation of loans.
"The Committee has considered questions of maturing obligations
of cities and corporations and believes that the present
situation does not warrant any attempt to issue long time bonds,
but that such refunding should be accomplished through short time
financing.
"The Clearing House Committee and the Stock Exchange Committee
have expressed appreciation of the cooperation shown by the
dealers in listed and unlisted securities and if all will
endeavor to live up to the spirit of the policy thus far adhered
to we are sure there will be no cause for criticisms on the part
of the banks or the Stock Exchange Committee.
"Your Committee of Seven will continue to meet in the Directors'
Room of the Chase National Bank daily, from 11 A.M. to 12 M., for
advice on any cases where we can be of any assistance whatever."
The practical plan adopted was as follows:
Bond houses having securities of their own for sale could place them
with their clients at prices approved by the Committee of Seven. All
purchasers and sellers of bonds, acting as brokers only, were required
to file their orders with the Committee of Seven when dealing in
unlisted bonds, and with the Stock Exchange Clearing House when
dealing in listed bonds, and these two agencies were empowered to
determine minimum prices below which sales could not be made.
It will be seen that a very important step in the direction of
relaxation of restraints was here taken. Not only was the prohibition
of all dealings which had marked the beginning of the crisis
withdrawn, but prices below the closing sales of July 30th were to be
permitted subject to the supervision of a Committee.
* * * * *
As has already been stated, the Committee on Clearing House had their
hands full from the time the Exchange closed, first with bringing
about the settlement of the contracts of July 30th, and secondly with
carrying on the business of making new contracts for members wishing
to trade in securities at or above the closing prices. It was
impossible, therefore, for the members of that Committee to give
personal attention to the difficult problem of determining the prices
below which listed bonds should not be sold. To meet this difficulty
it was decided that a small additional Committee of men known to be
thoroughly familiar with the bond business should be organized, and
that it should be their duty to control the liquidation of listed
bonds.
The carrying out of this plan at first met with a technical obstacle.
The power to appoint a Special Committee rested exclusively with the
Governing Committee of the Exchange; in order to secure action a
special meeting of that body would have to be called; in the early
weeks of September sentiment was still in so critical a state and
every act of the Exchange was so keenly watched that it was feared the
holding of an extraordinary meeting might start rumors and cause
alarm. In view of these considerations the Committee of Five hit upon
the makeshift of inviting three members of the Governing Committee,
who possessed the desired qualifications, to volunteer their services
as an advisory body in the matter of fixing prices for listed bonds.
The three members selected were Messrs. C. M. Newcombe, Vice President
of the Exchange, W. H. Remick, and W. D. Wood.
On the 19th of September these three gentlemen cheerfully undertook
the difficult and onerous task urged upon them, and for three months
they abandoned their own private interests and devoted their entire
time to it. Owing to the intelligent and judicious manner in which
they handled the delicate problem of conducting a liquidation in
listed bonds that should at once be effective and yet not lead to
demoralization, they placed themselves among the foremost of those to
whom the financial community owes a debt of gratitude.
* * * * *
By the latter part of September methods, as described above, had been
found for facilitating a restricted liquidation of listed stocks, and
of listed and unlisted bonds. Nothing, however, had been done to make
an outlet for unlisted stocks. The "Curb" market and certain prominent
unaffiliated houses dealing in these securities had loyally played
their part in suspending dealings, but symptoms began to show
themselves of possible revolt, and the Committee of Five set to work
to find a safety valve for this department also. The device of a
supervisory Committee had proven so efficacious in other directions,
that it was naturally turned to in this instance. The circumstances
differed, however, in one particular. The bond dealers had
spontaneously created for themselves the very efficient Committee of
Seven who took their affairs in hand, but the interests involved in
unlisted stocks did not show the same solidarity, and it was necessary
for the Committee of Five to take a hand in initiating action.
With this end in view they consulted Mr. Herbert B. Smithers, of the
firm of F. S. Smithers & Co., concerning the feasibility of having a
committee formed to pass upon and control a resumption of dealings in
unlisted stocks. Mr. Smithers was singled out for the reason that he
was a member of the Stock Exchange whose firm was among the most
prominent dealers in these securities, and the prompt and energetic
way in which he undertook the task proposed to him soon convinced the
Committee that they had not erred in resorting to him. He set about
organizing a Committee at once and on September 24th he appeared
before the Committee of Five accompanied by Messrs. A. C. Gwynne, F.
H. Hatch, A. H. Lockett, and E. K. McCormick. These gentlemen
announced that they were willing to act, with Mr. Smithers as their
Chairman, and a plan for the control of the market in unlisted stocks
was agreed upon.
In order to clothe this Committee (which included two Stock Exchange
members, two representatives of prominent outside dealers, and the
President of the Curb Association) with authority, the Committee of
Five directed members of the Exchange to submit proposed dealings in
unlisted stocks to them and abide by their rulings. The Stock Exchange
Committee could, of course, only control its own members, but it being
a fact that a very large part of the unlisted business emanated from
Stock Exchange houses, it was probable that their action would
determine that of unattached dealers. This expectation was, in the
main, borne out, and business in unlisted stocks began to be carried
on actively under the jurisdiction above described.
It is necessary to record, however, in the interest of preserving a
correct picture of the happenings of this momentous time, that the
smooth and gratifying operation of the various other Committees, which
sprang into being to handle the numerous problems presented, was not
entirely repeated in this case.
The conditions surrounding unlisted stocks seemed on the surface to be
identical with those pertaining to unlisted bonds. In both cases a
business that was partly in the hands of Stock Exchange members and
partly in those of outside concerns was to be presided over by a mixed
Committee representing both interests. In the case of the Bond
Committee of Seven this supervision was accepted and cheerfully lived
up to by practically all concerned. A different situation soon
developed in unlisted stocks. Almost immediately certain individuals
in the business began to assert that the unlisted Committee was a self
appointed body which did not represent the people most concerned, and
that being themselves dealers in the properties the trades in which
were under their supervision, these gentlemen could not be trusted to
act fairly in making their rulings. After much preliminary growling
which vented itself in interviews with the Committee of Five, this
antagonistic sentiment crystallized into a written protest.
On October 1st, the following statement was presented to the Committee
of Five.
"GENTLEMEN:
"Owing to a general feeling of dissatisfaction amongst members
and non-members of the New York Stock Exchange resulting from the
formation of a Committee of Five to supervise dealings in
Unlisted Securities, we, the undersigned, desire to suggest the
following recommendations for your consideration:
"_First_: The personnel of the Committee be changed to the effect
that same be composed of parties not identified as dealers.
"_Second_: That in stocks which have an open or active market,
transactions may be made without restriction or necessity of
report to the Committee, when at or above the closing prices of
July 30, 1914.
"_Third_: That where securities have not had an active or open
market the bid prices as published in the _Chronicle_ of August
1st, be accepted as the closing prices.
"_Fourth_: That in the case of securities where the Committee may
deem it possible to trade at prices below those prevailing on
July 30th, they establish minimum prices good for as long a time
as the Committee deems practical, and that a list of these prices
be furnished to those making application for same."
"We think that if the above recommendations are put into force,
it will do away with the criticism which has been made as to the
Committee as at present constituted, and by so doing increase the
efficiency of this Committee on Unlisted Securities, by securing
thorough and hearty cooperation on the part of all brokers and
dealers in these issues."
In reply to this appeal the Committee of Five pointed out that
whenever, in other cases, the action of a Committee had been invoked
to supervise the transaction of business, confidence in the integrity
of that Committee had been general and unquestioned. The Committee of
Seven, the Committee on Clearing House, the Committee of Three, and
the Committee of Five themselves had all been vested with dictatorial
powers over a business in which their members were personally engaged.
In order to render trading in unlisted stocks a possibility, at the
time, similar powers must be granted and similar confidence must be
given to some one. The Unlisted Stock Committee were not
self-appointed because they came into being at the instigation and
suggestion of the Committee of Five, and to disband them after they
had started upon their work, substituting other individuals in their
places, would merely stimulate fresh antagonism that might wreck the
entire project. The fact that these men were dealers in outside
properties especially fitted them to pass upon the reasonableness of
the prices that were to be made, and there was no more reason to
question their integrity of purpose than there would be to doubt that
of any individuals who might take their place.
A firm stand was thus taken in defence of this new Committee, and they
succeeded in carrying on their work successfully up to the time when
the amelioration of conditions enabled them to disband. It must be
regretfully recorded, however, that the petty jealousy and distrust
which had appeared in connection with this episode continued to show
themselves in a desultory way until the end. A few individuals threw
what impediments they could in the path of this Committee, and thereby
furnished the only exception to the wonderful exhibition of loyalty
and self effacement that manifested itself in every other department.
* * * * *
When the Exchange suddenly closed its doors, an immense number of
people, consisting of employees of the Exchange itself and the
clerical forces of all the many brokerage houses, were rendered idle.
As soon as it became evident that the suspension of business was going
to be indefinitely prolonged, the grave question arose as to the
extent to which these people would be thrown out of employment. The
Stock Exchange at once set the generous example of deciding to retain
its entire force without reduction of wages, and this decision was
carried through for the entire four and one half months of suspension.
A more difficult problem, however, confronted the brokerage houses.
Many of these firms had very heavy office rents and fixed charges of
various kinds; their business had been showing meager profits and even
losses for some years and, the length of the period of closing being
impossible to forecast, they did not dare to undertake burdens that
might get them into difficulties. The result was that a few strong
houses, with philanthropic proclivities, carried their clerical forces
through on full pay, but the majority were obliged to cut them down in
various ways. In some cases the full force was retained on greatly
reduced salaries, in others salaries were reduced and part of the
force discharged, and the net result was that a great number of
unfortunates were either thrown into unemployment altogether or placed
in very straightened circumstances.
It is an interesting fact, bearing on the popular superstition that
Wall Street is peopled by unprincipled worshippers of the dollar who
are incapable of those finer qualities of character which are confined
exclusively to other walks of life, that there is no region in which a
quicker response to the call of the needy can be obtained than on the
floor of the Stock Exchange. Even though the brokers were facing an
indefinite period of starvation themselves, with expenses running on
one side and receipts cut off on the other, the moment it became clear
that severe suffering had come upon the clerical forces of the Street
a movement was at once set on foot to start measures of relief and
assistance. Perhaps the best way to convey an idea of the form which
this assistance took is to quote from a report on the subject made by
one of those who generously gave his time to the work. What follows is
in his own words.
"A phase of the extraordinary and unprecedented conditions prevailing
in the Financial District, commonly known as 'Wall Street,' was the
necessity for cutting down office expenses, and though many firms
carried their salary list intact, a considerable number laid off from
one half to two thirds of their employees, and subsequent events
developed the fact that some of them discharged practically their
entire force.
"About the middle of September, the distress said to exist among the
Wall Street employees, who had lost their positions as a result of the
war in Europe, prompted Mr. C. E. Knoblauch to suggest that some
concerted action be taken to meet this emergency, if only as a
temporary expedient. A number of informal discussions of the subject
with fellow members of the Exchange, and further evidences of the
existence of a wider field for the work than was at first realized,
culminated in a call for a meeting in the office of Tefft & Company
and immediate organization.
"Officers having been duly elected, the personnel of the Committee was
declared to be as follows:--James B. Mabon, W. H. Remick, Graham F.
Blandy, R. H. Thomas, W. W. Price, G. V. Hollins, C. E. Knoblauch, C.
J. Housman, G. M. Sidenberg, Townsend Lawrence, T. F. Wilcox, Erastus
T. Tefft, Chairman; Charles L. Burnham, Secretary; Edward Roesler,
Treasurer.
"The title of the Committee was formally agreed upon as 'The Wall
Street Employees' Relief Committee.'
"Through the courtesy of Mr. Clarence Mackey, the offer of a suite of
rooms on the second floor of the Commercial Cable Building, 20 Broad
Street, for the use of the Committee, at no charge for rent, was
gratefully accepted, and arrangements for occupation were made at
once. Mr. Oswald Villard, through a member of the Committee, evidenced
his interest by offering temporary use of rooms in the _Evening Post_
Building for the purposes of the Committee.
"It was determined that the principal object of the Committee would be
to act as an Employment Bureau, to find positions for unemployed and
to relieve distress where it was found to exist. It was understood and
arranged for, that any Wall Street employee who had lost a position as
a result of the war was eligible, and that no fees whatever be
charged. A circular letter was sent to Stock Exchange members and
firms appealing for subscriptions, and the matter of selection of a
depository of the funds was referred to the Treasurer with power. The
work of receiving and recording registration blanks commenced with a
rush, over one hundred and fifty were filed the first day, and in a
few weeks they numbered over one thousand.
"A very pleasant feature of the work was the cordial cooperation
encountered on all sides. Helping hands were extended everywhere. The
newspapers gave many 'reading notices,' and special advertising rates,
and the news bureaus printed any and all notices as and when
requested. The Stock Exchange Library Committee and the Secretary's
Office placed their typewriting, multigraph and circular printing
facilities at the Committee's disposal, furnished the rooms with
desks, chairs, etc., and supplied all necessary stationery. The Stock
Exchange force of telegraphers and other employees practically in a
body volunteered their services, and those selected were of great
assistance in preparing the card index system, which was used and
found to be practical and eminently satisfactory. Appreciated
assistance was promptly tendered by The Telephone Clerks' Association,
The Association of Wall Street Employees, and The Wall Street
Telegraphers' Association.
"Several cases of sickness, some very serious, were taken care of by
Dr. L. A. Dessar, who gave free medical service to all applicants
recommended by the Committee, and provided hospital treatment when
required. The declarations made by the applicants demonstrated beyond
any question that the number of men, women, girls and boys for whom
prompt assistance in procuring employment was imperatively necessary
had been greatly under-estimated, and evidenced an absolute argument
endorsing the reasons for the Committee's existence.
"Many who applied were not in immediate need of money, but wanted
employment, which the members of the Committee sought for them by
individual solicitation of everyone they knew, or knew of, who were
employers, and also by careful, judicious and timely advertising in
the daily papers. Such satisfactory results were attained, that up to
date of this writing, (May 15, 1915), of over seventeen hundred
applications received, permanent positions were secured for about
seven hundred at rates of compensation that were distinctly
gratifying, all conditions considered. Two hundred and thirty were
placed in temporary jobs for periods ranging from a few days to
several weeks, a number of them being re-employed two or three times.
Four hundred and ninety, having been taken back by their former
employers, withdrew their applications.
"Numerous positions obtained for applicants while the Exchange was
closed were in lines other than Stock Exchange business, and Wall
Street clerks notwithstanding their recognized efficiency being, so to
speak, specially trained, it was often found to be difficult, even
impossible to make them fit the kind of work to which they were more
or less strangers. In view of the fact that this circumstance made
the accomplishment desired necessarily slow, the outcome demonstrated
that it was reasonably sure.
"The request for subscriptions to the fund met with a hearty and
generous response. Some apprehension was felt in this regard, but the
splendid result proved to be an agreeable surprise. Appeals for
subscriptions to the fund were made only to Stock Exchange members and
firms, nevertheless, thanks to the general interest manifested, and
the widespread advertising consequent thereto, contributions were
received from generous friends outside of Wall Street, to an extent
that was simply astonishing. Checks for $1,000 each were not unusual
items, and as a rule the request was made, 'please do not publish my
name.' A well known artist, in addition to a cash subscription,
presented one of his paintings to the Committee. Through the kind
assistance of the Chairman of The Stock Exchange Luncheon Club, the
picture was sold for the substantial sum of $500.
"The Treasurer, with ample funds at his disposal, was able to meet
calls for financial help that were frequent and pressing, and
recognizing the desirability of experienced and competent assistance
in making the necessarily intimate inquiries, to determine if
applicants for relief were worthy, he applied to Mr. Robert W.
DeForest, President of The Charity Organization Society, for expert
advice in the matter, and was referred by Mr. DeForest to Mr. Frank
Persons, Manager of the New York Bureau, and Miss Byington, in charge
of the Brooklyn Branch, who rendered invaluable services in
connection with many of the applications, all of which were carefully
investigated. Much suffering and distress, and some cases of actual
destitution were found to exist, and while a detailed statistical
statement would seem uncalled for and not desired at this time, the
following brief resume of the Committee's 'relief work' will
undoubtedly prove to be of interest.
"Financial assistance was extended to about one hundred individuals
and families; rent was paid for thirty-nine; food purchased for
forty-six; clothing was furnished in seven instances; five persons
were placed in hospitals; there were a considerable number of cases
where the Committee in whole or in part took care of funeral expenses;
old debts for medical attendance and drugs; agency fees and surety
bonds; life insurance premiums, board and lodging, etc., etc. Many
applicants for assistance proved to be merely temporarily embarrassed,
they were willing and anxious to be helped but did not want charity,
so to meet that emergency a form of voucher was used, which
acknowledged the receipt of a 'loan' without interest, to be repaid at
the convenience of the 'borrower.' That applied to _cash_ of course,
payments for groceries, rent, etc., were simply receipted for.
"The results achieved, in the opinion of many, would seem to warrant
an amendment to the original idea that a return to normal conditions
would involve the dissolution of the Committee, and the proposition
that it be made a permanent organization is being seriously
considered."
This record is deeply gratifying to the brokerage fraternity because
it discloses the fact that, even in the midst of a calamity so great
that no individual could feel himself beyond the reach of insolvency,
the impulse to succor the unfortunate remained as strong as ever among
them.