STOCK EXCHANGE. 581 STOCK EXCHANGE. in which half a dozen Stock Excliangc houses failed and two important banks were compelled to close their doors. The period from 18SG to 1888 inclusive wa3 chielly marked by the large issues of securities to provide funds for the verj' extensive railway building then in progress. There were several excited markets on the Stock E.xchange, though the tendency at the close of the period was toward depression of values, largely because of the enormous creation of new securities. The year IStlO was again marked by great activity and rising prices on the Stock Exchange. This 'boom' was checked by the Baring panic of No- vember, 1890, in London, which was retlected by a prompt recall of English capital from the United States, and by a New York Stock Ex- change panic, in the course of which to or three broker houses failed. From then until the out- break of the more serious panic of 1893, a shrink- age in business was the chief characteristic of the New York Stock Exchange's history. The panic of 1893 was in many respects one of the most dramatic episodes in the Stock Exchange history. There was at one lime, dur- ing July of that year, talk of repeating the expedient of 1873 and closing the Exchange. This turned out to be unnecessary, as foreign capital came to the market's relief in the mo- ment of emergency. The following year, 1894, was a period of great depression, when the vol- ume of Stock Exchange business fell to the lowest point since 1878. Recovery followed in 1895, when foreign capital was again commanded in connection with the international syndicate to float the United States Government's bond issue and protect the Treasury gold reserve. A panic of smaller proportions swept over the Stock Exchange at the close of this year, in connec- tion with the collapse of the protective opera- tions and the international clash between Amer- ica and Great Britain over Venezuela. The two ensuing years were chiefly characterized by the reorganization of the great number of important railways which had failed during 1893 and 1894, and whose new securities, largely increased in quantitv, were placed through the medium of the Stock Exchange in 1896 and 1897. The financial revival which began at the close of the last-named year introduced a new epoch in the history of the New York Stock Exchange — an epoch in all respects the most remarkable of its history. Supply of American capital avail- able for investment purposes seemed suddenly to have become unlimited — largely because of the country's immensely profitable harvests at a time of European famine, but also on account of a wholly unprecedented increase in our general export trade, in manufactures as Well as in agri- cultural products, which gave to our markets a command over foreign capital which they had never before possessed. This increase in capital was made use of by promoters of all kinds of enterprises, and their shares found active re- ception on the Stock Exchange. A highlj' excited movement for the rise at the opening' of 1899 converged chiefly on shares of industrial com- panies organized to buy up independent plants. Checked by the excess of the speculators and by an industrial reaction during the Presidential contest of 1900. this movement was renewed with immense force at the opening of 1901. At that time all precedents of every kind in Stock Ex- change history were broken. Where, a few years before, transactions of 200,000 shares a day had been regarded as constituting a large market and half a million shares as a day of extreme activity, scarcely a day now elapsed in which the volume of business did not run from one to two million shares, culminating on April 30, 1901, in transactions of 3,200,000 shares. Prices in the meantime were advancing at a rate which brought the entire financial public into the field as a speculator. The real force underlying the movement was the purchase of stock companies by other companies which pledged their credit to raise the funds requisite to provide for the pur- chase. This movement culminated in the famous Northern Pacific corner of May 9, 1901. when the efforts of two rival groups of capitalists to get hold of that railroad property forced its shares to the price of $1000, the stock having never touched $100 until three weeks before. Apprehension that operators who were unable to deliver stock which they had pledged would be dealt with summarily, caused one of the most violent collapses of values in the Stock Ex- change's history. Recovery was prompt, and both 1901 and 1902 were characterized by nu- merous sensational movements for the advance, the second of those years scoring as a rule the higher values. In general, however, it was recog- nized that high-water mark in Stock Exchange activity had been reached. In the autumn of 1901 and in the fall of 1902 and the early part of 1903 severe reaction in values supervened. The noteworthy characteristic of the period was the employment of enormously wealthy syn- dicates to sustain prices for the newly issued shares on the Stock Exchange until the public could be induced to buy. Such syndicates were remunerated at first by large allotments of stock and later by heavy cash payments, the syndicate formed in March, 1901, to 'underwrite' the bil- lion-dollar stock issued by the United States Steel Corporation to take up the shares of other steel and iron combinations, pledging itself, in case of necessity, to advance $200,000,000 capital for the purpose. The stock issue worked out so successfull.y, however, that only a small fraction of the guarantee was called for, and two j'ears later the original capital subscribed was re- turned to subscribers, with an additional cash allotment suflicient to raise profits to 200 per cent. A second syndicate, formed in 1902 to underwrite a $.50,000,000 bond issue by the same corporation and the conversion of $200,000,000 of its stock into lionds, fared less fortunately, being obliged to perform the whole of its guar- antee at a time of falling prices. In the spring of 1903 it was generally recognized that the extensive employment of the syndicate under- writing plan had 'tied up' immense amounts of capital which were usually available in the gen- eral market. The investing public having bought very sparingly and the syndicate bank- ing interests being unable to support prices, a very severe and general decline on the Stock Exchange ensued. _ Volume of Business. Stock exchanges keep no official record of transactions on their floor. In New York such records are carefully kept by unofficial chroniclers; but as this is not done in London or on the Continent, comparison is impossible. It is safe to say, however, that in recent years the volume of business done
