In discussing the position of the Stock Exchange, there are two questions which have each to be decided on their own merits. One is the settlement, which is being postponed month after month, and the other is the re-opening of the market for business. The two are, however, inter-connected. When the Stock Exchange closed on August 3, on the opening of hostilities in Europe, it followed the rule of practically every country in the world. All the markets in every part of the world were disorganized, and it was necessary to protect the share market—especially as the banks themselves did not know where they stood. As a matter of fact, the closing on gust 3 was mainly precautionary, and was a very wise step.
It took some time, of course, to understand the real position. In any case, money became so tight everywhere, that the banks in their own interests and in that of the public, held to what money they had in their coffers In the countries directly engaged in the war belligerents, the situation became extremely difficult. The main problem was to provide the sinews of war. National interests were at ko; and business, including that hares, had naturally to give way to the efforts of the Government to raise money, with which to carry on the campaign. The bourses of London, Paris, Berlin and Petrograd naturally closed. But there were other parts of the world not directly interested in the war, like the United States or China. The closing of such powerful markets as those of London and Paris, where securities from all parts of the world are marketed, could not but react on the markets in the United States—of course, for a while.
In some instances, the closing of the European markets has had an equal influence in the United States. For instance, the principal market for American cotton is Liverpool and the Continent of Europe, When, owing to the war. the England and the Continent did not buy cotton, it was inevitable that the cotton' market in the States should remain closed.
Tt was not so, however, with the share market, because there was a great number of purely local stocks, unaffected except in a general way, by the crisis in Europe. The principal Stock Exchanges in the Exchanges in the States were directed toward the resumption of activity and to the keeping up of share values. It was understood, of course, that business must remain restricted, and in these days of want of credit must be purely for cash.
So, the regulation was adopted throughout the States that not only must business be for cash, but that prices should be at or above those ruling on July 30, that is, before the opening of hostilities in Europe. In countries not dinectly affected by the war, the same sort of system was followed. In Bombay, Calcutta, Toronto and many other places, the market has been opened for cash with prices riling above those of July 30. Even on the London Stock Exchange, although the Exchange is not open to business, the Committee permits business for cash and at prices above those ruling on July 30.
The Position in Shanghat, The volume of China's foreign trade has been considerably affected by the situation in Europe, because the countries that buy from, or sell to, China are not able to do so at present. The volume of share business should not be affected in any similar proportion, because Shanghai and Hongkong do not buy shares from, or sell them to, Europe. The stocks dealt with in Shanghai are mostly local. For many of them there is no market, even outside of Shanghai. The position ig certainly anomalous: In these disturbed conditions we are able to do some business, however, even with countries that are engaged in the war. But when the business of buying or selling stocks locally is concerned, we do nothing at all—at least, officially. The successive postponements of the settlements are evidence of the presumption that a settlement of transections entered into, between brokers on the one hand and principals on the other, is not possible. It may be, of course, that euch postponement are made with a view to benefiting the public. But, as a matter of fact, the latter was never consulted. Moreover, it would certainly not be advantageous to brokers to give even the slightest chance for anybody to blame them, if the fault lay wholly with the public or share dealers. The exact position of the market and the apparent reason why the settlements are being postponed
Text read from the printed page and cleaned; old type leaves the occasional error.