(Note: There are many articles of various kinds of "America is decaying", and some of the analysis is a statement of facts and logical self-consistency; however, some judgments may be biased (such as a series of articles by a "financial big V" who was recently arrested for illegal deposits). It just so happens that Mr. Pang Zhongjia and I co-authored "Why the United States" (published in 2012), which I co-authored 10 years ago, introduced the economy, science and technology, military, education, business, and people's livelihood in the United States, which seems to be outdated. Then from April 2nd, we will excerpt some of the content and share it with you... ）
4-3-5 Gilded Age
After the Civil War, the entire government was corrupt, and the super-giants who came out of this era of corruption, such as Andrew Carnegie, John F. Kennedy, and john carnegie, were born in the middle of nowhere. D. Rockefeller and J. P. Morgan, too, has always seen government as one of the problems that need to be addressed in order for markets to be effectively regulated, rather than as a means of solving them. When they encounter problems in the market, they always rely on their own strength to stop the chaos, rather than seeking to solve it through the government, the most easily bought institution in the country.
It is hard for people today to imagine how thorough the corruption of the U.S. government was in the mid-nineteenth century. This is especially true of New York, the richest and most populous city, and the stock market provides the perfect platform for trading power and money. At a time when laws and regulations on securities were sorely lacking, speculators in the stock market, invariably, nurtured and controlled the loyal parliamentarians and judges, who did everything in their power to influence the rise and fall of stock prices, each serving the speculative activities of their masters. In fact, the game of stock market speculators has largely become a shameless game in which corrupt legislators compete to make and tamper with stock market rules to wantonly infringe on public power.
The London stock market, although it was still the largest securities market in the world at this time, had gradually sobered up to the fact that on the other side of the Atlantic, another giant was rising. At this time, the market value of the London stock market was about $10 billion, and the market value of Wall Street was only about $3 billion, but it was growing much faster than the London market. With the atlantic submarine cable in service in 1866, Wall Street brokers became increasingly influential in the London stock market. But Londoners remain receptive to the wall street style, with the London Times writing that their "unscrupulous manipulation of the market to protect their interests is too barbaric and has created a lot of distrust." ”
After the smoke, when people re-examined the game field that had been chaotic by crazy speculators and corrupt legislators, they finally realized the need for laws to improve the stock issuance system of listed companies.
At this time, wall street brokers themselves felt the need for change even more than the government. They have been in the industry for a long time, but they can only earn a limited commission, while speculators, some of whom are the management of the company, have many opportunities to get rich in muddy waters. In response to the runaway markets in the speculative war, the Then Commercial and Chronical (influential barron's) recommended the following rules:
1. The board of directors has no right to issue new shares unless 2/3 of the shareholders agree;
2. Existing shareholders have the right of pre-emptive subscription for the new shares issued, and the new shares must be publicly issued, and a sufficiently long advance period must be given;
3. All listed companies must keep a record of the total amount of all their circulating shares in a reputable financial institution, and accept the inspection of any shareholder or the entity that provides loans to the company with the company's shares as a pledge at any time;
(4) The same requirements apply to all shares issued for dividends or for other purposes;
5. Violation of any of the above provisions is an offence and will be punished or fined.
These provisions form the basis of today's U.S. Securities Act, but it could not have been established in the form of law in 1860. Because the federal government at that time had not yet made the regulation of financial markets part of its responsibilities, and the Legislature of New York State could not take the initiative to reform a system that could generate huge gray revenues for its members.
Since the state or federal government could not implement these changes, Wall Street itself began to implement a series of reforms. The two largest institutions on Wall Street, the New York Stock Exchange and the Open Exchange, began working together because the exchange realized that both the exchange's members (brokers) and customers (investors) needed to know the exact number of shares issued by public companies. Brokers on exchanges are happy to sell stocks that may be problematic because it doesn't affect their ability to earn commissions; but sometimes they also pledge these stocks to lend to their clients, which is a completely different situation. If the number of shares in a company can be doubled or halved at any time, who knows the true value of those stocks?
On November 30, 1868, the two exchanges issued the same regulatory regulations, requiring all shares auctioned on the exchange to be registered, and any new share offerings must be notified 30 days in advance. The following year, the open exchange merged with the New York Stock Exchange to form an exchange that could dominate all of Wall Street. For brokers, being a member of an exchange is a matter of survival and therefore has to comply with regulatory regulations. Not only have these regulations increased in number, but they have also become more stringent in their implementation, and Wall Street has undergone fundamental changes as a result. Wall Street writer James W. Bush. K. Midbury wrote at the time: "Brokers on stock exchanges must choose to either continue to speculate in the market for small profits and pay a heavy price for it, or to take a longer-term view and try to abandon the bad habit of manipulating the market by forming parties for personal gain." The former means isolating oneself, while the latter will play a prelude to Wall Street's worldwide expansion, New York will become the imperial capital, and Wall Street will become the world's most important financial center. (to be continued)
Written in October 2011 on the Hudson River in New York
(Sijin Note: Except for the author, all articles are original by Sijin.) 【Disclaimer】This article only represents the personal exposition and views of the original author, and readers are kindly requested to judge for their own judgment. The content or data is for informational purposes only and does not constitute any specific investment advice, is not used for any commercial purpose, and is not responsible for its authenticity. Investors operate accordingly at their own risk. ）