Fifty years in Wall Street
The question was whether to provide for these 277 millions by a fresh
issue of United States notes, or by interest-bearing loans.
The Secretary was opposed to increase the volume of the currency, saying
that the result would be the inflation of prices, increase of
expenditures, augmentation of debt, and ultimately disastrous defeat of
the very purposes sought to be attained by it.
He was in favor of an increase in the amount authorized to be borrowed
on the 5-20 bonds. He advised the creation of banking associations which
should secure their circulation by a deposit of Government bonds. One
object of this was to create a market for the bonds.
Congress was not in favor of this proposition, and the bill of Mr.
Hooper was again offered in the following January, but was adversely
reported from the Committee on Ways and Means.
Another new issue of 100 millions United States notes was ordered on
motion of Mr. Stevens, of Pennsylvania, to meet the constantly
increasing needs of the army and navy.
Mr. Lincoln signed the joint resolution ordering the new issue with some
reluctance, and sent a special message to the House, in which he
expressed his regret that it was necessary to add this last amount to
the currency while the suspended banks were free to increase their
circulation.
Soon after this Senator Sherman offered a bill to provide a national
currency, somewhat after the model of Mr. Hooper’s bill. The Sherman
bill was passed before the end of February. This virtually secured the
present national banking system.
In order to show more clearly the nature of the national bank
legislation, and the prominent part taken by Mr. Spaulding and a few
others therein, Mr. Chase having been the directing mind, it is
necessary to make a brief resume of the action of Congress with the
State banks in this connection.
In January, 1862, the banks applied to Secretary Chase to receive their
notes in payment for the bonds which he had for sale, but the Secretary,
thinking that this would inflate the bank currency, refused the offer.
Yet the process of inflation went on until it increased from 130 to 167
millions.
When Mr. Spaulding advocated the National Bank Act on the ground that it
would provide a permanently improved bank currency, the Hon. Roscoe
Conkling, at that time in the lower House, opposed the policy of making
war upon the twelve hundred banks in the free States, and made a very
affecting appeal for the orphans and widows who had stock therein. He
proposed to issue 260 millions of seven per cent. bonds, payable in
thirty-one years, to be exchanged for the bills of the suspended banks
of New York, Philadelphia and Boston, and also to issue 200 millions of
United States notes, payable in coin in a year. Mr. Conkling’s scheme
was assailed by Mr. Bingham, of Ohio, on the ground that it would
subject the national currency to the mercy of city bankers and brokers.
Other eminent representatives stood up for the maintenance and integrity
of the State banks, and notably Mr. Conkling opposed the measure
vigorously, which was intended to tax the State banks out of existence.
Mr. Spaulding, who advocated the bill, was followed by Mr. Fenton in an
able argument, showing the superiority of a currency secured by United
States bonds, and Senator Sherman explained the great evil occasioned by
the success attending the counterfeiting of the State bank notes.
These arguments seemed to be conclusive and overwhelming in the passage
of the bill.
It must not be forgotten, to the honor of the State of New York, that
the National Bank Act was founded on the Banking act of this State,
whose chief features were a currency secured on public funds, and that
directors and stockholders should be personally liable.
The authorship of this idea is attributed to Mr. Stillman, who is also
the well-known author of the “Stillman Act” to abolish imprisonment for
debt.
This bank act, which was especially engineered by the far-seeing
Secretary of the Treasury, Salmon P. Chase, had almost a miraculous
effect upon the credit of the country. It created a new and extensive
market for United States bonds, which immediately advanced from 93 to
par.
All the running expenses of the Government, accumulated with such
rapidity, were paid from the sale of the 5-20’s within the short period
of two months or thereabouts.
It was stated in the Treasury report at the end of the year that “The
Bank Act at once inspired faith in the securities of the Government,
and, more than any other cause, enabled the Secretary to provide for the
prompt payment of the soldiers and the public creditors.”
Mr. Hugh McCulloch, the Comptroller of the Currency, saw room for
certain changes in the law, some of which were effected by Congress in
the first session of 1864. These changes were embodied in the Act of
June, 1864.
There was a long debate and strenuous opposition, in which Secretary
Chase deeply sympathized, against State taxation of the national banks,
but despite the opposition the taxation clause was carried.
At length the modified act was passed, limiting the total amount of
United States notes to be issued to 400 millions, with such additional
amount, not exceeding 50 millions, as might be transiently required for
the redemption of the temporary loan, and thus the main features of the
Bank Act, which has served its purpose very well, became a law.
I hope, however, ere long, as I have more fully intimated in another
chapter, to see a superior system of banking, which I believe must
succeed the present system, which is now doomed to “innocuous desuetude”
through the imminent payment of the public debt.
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CHAPTER XI.
THE NEW YORK STOCK EXCHANGE.
HISTORY OF THE ORGANIZATION FOR NINETY-FOUR YEARS.—FROM A BUTTON-WOOD
TREE TO A PALACE COSTING MILLIONS OF DOLLARS.—ENORMOUS GROWTH AND
DEVELOPMENT OF THE BUSINESS.—HOW THE PRESENT STOCK EXCHANGE WAS
FORMED BY THE CONSOLIDATION OF OTHER FINANCIAL BODIES.—PATRIOTIC
ACTION DURING THE WAR PERIOD.—REMINISCENCES OF MEN AND EVENTS.
The New York Stock Exchange is not a building, as people generally
suppose. It is an Association of brokers united, but not incorporated by
law, for the purpose of buying and selling representatives of value
called “stocks” and “bonds.” Stocks, in the American sense of the term,
are properties consisting of shares in joint stock companies or
corporations, or in the obligations of a government for its funded debt.
In England, government obligations only, are called “stocks,” and the
obligations of companies or corporations are called “shares.”
The edifice in which the Stock Exchange meets, and which, in common
parlance, is designated by the name of the association of members,
occupies a large portion of the block bounded by Broad, Wall, and New
streets, and Exchange Place. Its main entrance is on Broad street, and
it has entrances also on Wall and New streets. It has a frontage of 65
feet on Broad and 158 on New, on which the back entrance is situated.
The members of the Stock Exchange have no need of a charter from the
Legislature. In fact, they have steadily resisted all attempts of the
Solons of this State to legislate in their interest. Their notion in
this respect is more fully commented upon in my chapter on “Corners.”
The Tweed Ring, in the height of its power, made a bold attempt to force
a charter upon the Stock Exchange, but it was indignantly rejected. The
irrepressible “Boss” and his henchmen, by the presentation of false
names, had a charter for the incorporation of the Stock Exchange passed
in 1871, the year prior to Tweed’s downfall, and it was signed by the
Governor. For these gratuitous services the sum of $100,000 was
impudently demanded; but the charter was refused, and the demand
repudiated by the association. Since 1879 until recently the membership,
which has been full, was limited to 1,100, but by a resolution lately
passed the limit is now placed at 1,200. The seats for the past year
have sold at from $25,000 to $30,000.
The Stock Exchange building is a fine, solid structure, devoid of
anything showy, pretentious or decorative. It was designed by James
Renwick, the architect of Grace Church and of St. Patrick’s Roman
Catholic Cathedral, on Fifth avenue at Fiftieth street. The cost of the
building was nearly $2,000,000. It costs nearly $200,000 a year to pay
the salaries of the various officials and keep the building in proper
repair. The apparatus for ventilating the building is one of the best.
It cost $30,000, and supplies an abundance of pure air and perfumes at
the same time. The heating and cooling arrangements are the best of
their kind, and the lighting is admirable. There are three chandeliers
containing 200 electric lamps, which throw a flood of beautiful soft
light around the whole interior. The building is well supplied with
rooms for members, lavatories, and closets. One great feature of the
interior consists of the large vaults, which contain more than a
thousand safes for the safe keeping of securities. About 400 of those
safes are let to persons who are not members. The vaults and safes are
considered the strongest in the country.
The growth of this institution appears marvelous when we go back to its
humble beginning in 1792, when the originators formed the association
under a button-wood tree in front of what is now No. 60 Wall Street.
Following is the text of the simple agreement into which the original
members entered: “We, the subscribers, brokers for the purchase and sale
of public stocks, do hereby solemnly promise and pledge ourselves to
each other that we will not buy or sell from this date, for any person
whatsoever any kind of public stocks at a less rate than one-quarter of
one per cent. commission on the specie value, and that we will give a
preference to each other in our negotiations. In testimony whereof, we
have set our hands this 17th day of May, at New York, 1792. Lem Bleekez,
Hugh Smith, Armstrong & Barnewell, Samuel Marsh, Bernard Hart, Sutton &
Hardy, Benjamin Seixas, John Heary, John A. Hardenbrook, Amurt Beebee,
Alexander Gunty, Andrew D. Barclay, Empn. Hart, Julian McIvers, G. N.
Bleecker, Peter Inspach, Benjamin Winthrop, James Ferrers, Isaac M.
Gomez, Augustine H. Lawrence, John Besley, Charles McIvers, Jr.,
Robinson & Hartshorn, David Reedy.”
This arrangement existed, and was the only one by which the members were
bound, until 1820, when daily meetings and the regular call of stocks
began. The Board met in various places, including the old Merchants’
Exchange on the corner of Wall and William streets, but did not take
root in permanent shape until the year 1842, when it became established
in the new Merchants’ Exchange, now the Custom House. An illustration of
the old Merchants’ Exchange is given on another page. The sight of it
will doubtless awake a host of endearing reminiscences in the minds of
some of the oldest merchants and speculators. It will be remembered by
the few survivors of that period that about the year 1820 the meetings
of the Board were held in the office of Samuel J. Beebee, at 47 Wall
Street. The Board also met in a room in the rear of Leonard Bleecker’s;
also in the office of the old _Courier and Journal_. Subsequently the
meetings of the Board were held in an upper room of the old Merchants’
Exchange. This building was destroyed by the great fire of 1835, and
afterwards the new Merchants’ Exchange was built. The Board moved into
this building in 1842, and remained there until 1853. Up to this time
the Board was the very closest of corporations, its membership being