(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science and technology, military, education, business, and people's livelihood in the United States, which seems to be outdated.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... ）
4-3-6 The rise of the financial empire, the rules of the game are prepared
John Steele Gordon (1944-) wrote in his book The Great Game: "The Whitney scandal completely changed the original balance of power. Douglas (chairman of the SEC) and the SEC quickly seized the moment when the conservative bloc would collapse. The New York Stock Exchange acquired a new charter, and the president of the exchange became a salaried professional manager instead of a member of the exchange. ”
The fall of Whitney caused the power of the Apologists to collapse and the pace of reform was greatly accelerated. Before that, all the reforms on Wall Street had never touched the interests of the exchange's own members, and this time it was completely different, completely changing the way the exchange operated, making it begin to truly serve the public investors and laying a solid foundation for the great prosperity of Wall Street that was coming.
The United States, mired in the Great Depression, was once again saved by a war on the other side of the Atlantic, this time in World War II. The experience of the last world war proved that the war brought huge economic benefits to the United States, so unlike the early days of World War I, the beginning of World War II did not immediately bring the US stock market into a downturn. Conversely, the Dow Jones rose slightly. But soon, with Hitler's victory in the early stages of the war, pessimism began to spread, and Wall Street fell into a three-year bear market with a severe contraction in trading volumes.
But in fact, while the stock market is falling, the U.S. economy is experiencing a new round of rapid growth, with corporate earnings surging from $6.4 billion in 1939 to $20.9 billion in 1942. In addition to the huge demand created by the war, the civilian economy has also continued to grow. Civilian demand, which was severely suppressed during the war, such as housing, automobiles, and home appliances, was about to give birth to a great boom in the postwar US economy.
World War II and the subsequent economic boom cemented Wall Street's position as the financial center of the United States and the world. Wall Street began with trading under the plane tree, and now it is the location of the giants of American financial institutions, concentrating the headquarters of the New York Stock Exchange, the American Stock Exchange, securities dealers, investment banks, trust companies, the Federal Reserve Bank, various utilities and insurance companies; the general management offices of large companies such as banks, insurance, railroads, shipping, mining, and manufacturing opened by Rockefeller and Morgan, as well as commodity exchanges such as cotton, coffee, sugar, and cocoa, which have truly become the financial and world financial and world financial and international markets. The center of securities trading. Bustling and unprecedented, it is worthy of being the world's first thoroughfare.
During this period, two people had a profound impact on the future of Wall Street: Charles Merrill (1885-1956) and Benjamin Graham (1894-1976).
Merrill Lynch revolutionized the chain's operating model into the brokerage business, creating Merrill Lynch as a super financial institution with tentacles throughout the United States and even around the world. He also rigorously trained his relationship managers to become a new generation of brokers with financial knowledge and integrity awareness, thus changing the image of Wall Street brokers in one fell swoop. More importantly, it was these brokers who first introduced stocks to middle-class American families.
Before Graham, there was no standard for stock pricing on Wall Street, people only knew to sit and speculate, and Graham proved the importance of fundamental research through his own success. He made the concept of "investment" eventually appear on Wall Street and gradually replace "speculation" and become mainstream. He pioneered the modern securities analytics industry, proposing for the first time concepts such as working capital and cash flow of companies, which made rational investing possible, and are now an essential tool for all equity analysts around the world to analyze the value of public companies. Graham is thus known as the father of securities analysis and the "dean of Wall Street".
All of this has laid the foundation for the new take-off of Wall Street, which has always been considered an accessory to the main economic "Main Street" of the United States, however, as Wall Street plays an increasingly important role in the economic life of the United States, more and more people have begun to think: "Wall Street is the main street."
Figure 4-3-7 Interior view of the lobby of the New York Stock Exchange
In 1954, Wall Street once again ushered in a decade-long bull market. After years of lag, the stock market finally reflects the rapid growth of the US real economy in wartime and post-war. What is more significant is that institutional investors, including a large number of pension funds and mutual funds, have begun to appear in the securities market and gradually dominate. It was also during this period that the development of science and technology made the technical equipment of the exchange change with each passing day, and new stock automatic quotation machines and digital computers began to be used.
Between 1962 and 1963, commodity speculator Angeles orchestrated an elaborate soybean oil hoarding campaign that failed and bogged down two big brokerage firms on Wall Street with ties to him. As the brokerage firm's assets were liquidated, the public began to worry about the safety of the securities they had on the brokerage firm's books; to make matters worse, President Kennedy was suddenly assassinated, and panic spread like a plague on Wall Street. In the end, the Brokerage Firms on Wall Street banded together and took decisive self-help actions, and the Exchange came out to take responsibility for the bankruptcy of the two brokerage firms, which calmed the financial panic.
In order to prevent the recurrence of a single financial risk into financial system risk in the future, the New York Stock Exchange and the Investment Bank first established the Venture Fund in 1964. In the history of Wall Street, where exchanges and brokers' committees have acted unanimously to curb excessive speculation, and investment banks have unanimously demanded annual reports and independent accounting statements from public companies, Wall Street participants have once again come together, realizing that there are common interests that transcend their respective interests and need to be safeguarded.
In the mid-to-late 1960s and early 1970s, the United States experienced an era of uncertainty. The Vietnam War, inflation, the oil crisis, and the concomitant stock market downturn have once again plunged Wall Street into trouble, and the argument that "Wall Street is about to perish" has reappeared. But in the midst of this lament, the changes that will bring great prosperity to Wall Street are quietly taking place. (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. ）