It is a common habit to speak of Wall street as the financial centre of
the Republic; but only those who are acquainted with its transactions can
know how true this is. Regarding Wall street and New York as synonymous
terms, we find that the street is not only a great power in this country,
but that it is one of the great controlling powers of the financial
world. Indeed, if the prosperity of the country is as marked in the
future as it has been in the past, there is good reason to believe that
Wall street will control the whole world of finance. Its geographical
location is in its favor. By noon the New York broker has full
information of the same day's transactions in London, Frankfort, and
Paris, and can shape his course in accordance with this knowledge, while
the European broker cannot profit by his knowledge of matters in New York
until the next day.
The Stock Exchange of New York numbers over 1000 members, and its
aggregate wealth is greater than that of any similar association in the
world. The par value of the annual sales made at the regular Boards and
"over the counter" is estimated at over $22,000,000,000 annually. The
par value of the authorized stocks, bonds, and Governments dealt in by
the regular Boards is more than $3,000,000,000, and this vast sum is
turned over and over many times during the year. The aggregate of the
brokers' commissions on the sales and purchases made by them is estimated
by competent authority at $43,750,000 annually. The bulk of this
enormous business is in the hands of about 400 houses.
"Out of all the incorporated banks in the United States, there are thirty
situated in Wall street and its neighborhood, whose office is not unlike
that of the heart in the economy of animal life. Although less than half
the full number of banks in the metropolis, these thirty have two-thirds
of the capital, and quite two-thirds of the circulation. By a provision
of statutory law, all outside National banks, numbering some 1600, are
allowed to keep one-half, and many three-fifths, of their reserve
balances in New York. In this way our great financial centre is rapidly
acquiring the function of a National clearing-house. These temporary
deposits bear a small interest, and are subject to be called for at a
day's notice. They can only be used, therefore, by the employing banks
on the same conditions. The stock market supplies these conditions.
Bonds and shares bought to-day and sold to-morrow, endowed with all the
properties of swift conversion, and held by men whose training has been
one of incessant grappling with the new and unexpected, are the only
class of property upon which money can safely be borrowed without a
protection against sudden demands. On these securities, therefore, the
down-town banks make call loans. The name implies the nature. The money
which the thirty receive from without, together with their own reserves,
is lent freely to stock-brokers, with the simple provision that it must
be returned immediately upon notice, if financial exigencies require it.
This vast volume of what may well be styled fluid wealth is difficult of
estimate in figures. The published statements of loans made by city
banks make no distinction between discounts of commercial paper and what
is advanced on securities. In sum total, the thirty banks lend weekly
about $165,000,000. Indeed, including all New York banks, the average is
nearly $255,000,000. During the week ending September 18, 1868, these
banks lent $266,496,024. The real meaning of these last figures will be
better understood when it is known that they exceed the entire average
loans and discounts of all the national banks of New England and New York
State, with the exception, of course, of the city itself. Or, to take a
more sweeping view, they surpass the total weekly loans of national banks
in Maryland, Virginia, North Carolina, South Carolina, West Virginia,
Georgia, Alabama, Texas, Arkansas, Kentucky, Tennessee, Ohio, Nebraska,
Kansas, Missouri, Minnesota, Iowa, Wisconsin, Illinois, Michigan,
Indiana, Delaware, and New Jersey. Nigh $180,000,000 of the amount cited
above were advanced by the down-town banks. What proportion of this was
lent on stocks? Probably much over one-third. As many of the other
banks also make call loans, we may, perhaps, estimate that from
$70,000,000 to $100,000,000 are furnished daily to the brokers and
operators of New York.
[Picture: THE PARK BANK, BROADWAY.]
"This, however, is but one element in the lending force of the city.
There are five Trust Companies, with capitals amounting in the aggregate
to $5,500,000, which lend, at times, $60,000,000 a week. There are also
a large number of private banking houses, of which Jay Cooke & Co. may be
selected as representatives, that daily loan vast sums of money on
security. The foreign houses alone, which, like Belmont & Co., Brown
Brothers, Drexel, Winthrop & Co., operate in Wall street, employ not much
less than $200,000,000 of capital."