Stock Exchanges and Security Speculation

Report Outline
Legal Position of Stock Exchanges
Functions and Business Methods of Stock Exchanges
Proposals for Regulation of Stock Exchanges
Speculation and Manipulation
Control of Speculation Through Control of Credit

Legal Position of Stock Exchanges

Present Freedom from Public Regulation

Writing of stock speculation a third of a century ago—toward the close of the depression that followed the panic of 1893—Henry Crosby Emery observed that the security exchanges of the United States had been able to maintain their “truly private character,” despite the overshadowing importance they had come to assume in the business world as the country had advanced in wealth. “They are controlled by no special legislation, and they make their own rules and carry on dealings subject only to the laws which regulate such transactions everywhere.”

The early '90s were a period of wide agitation for federal regulation of stock and commodity exchanges. Crosby described the methods that had been developed in Europe for governmental control of such markets, and added:

In striking contrast to.…the legal position of the principal continental exchanges is the private and independent character of the New York Stock Exchange.…That an association which dominates the financial market, directs the course of investment, and settles the value of property for millions of people has for nearly a century maintained itself as a purely private organization, and will perhaps continue to do so for another hundred years, is a striking example of the confidence of the Anglo-Saxon race that, as fast as public wants develop, private activity will furnish the best means to satisfy them.