Little Markets

Assembled in Cleveland last week for a two-day annual convention was that exclusive little trade organization, the Associated Stock Exchanges. It has only 22 members, though the full roster of U. S. stockmarkets including the Honolulu Stock Exchange and the Manila Stock Exchange numbers 30.* Out of that total 21 are registered with the Securities & Exchange Commission as "national securities exchanges." The rest, largely local in character, enjoy temporary exemption pending SEC investigation. Even among registered markets only two are really national institutions--the New York Stock Exchange, which accounts for about 86% of the total dollar volume of market trading, and the New York Curb Exchange, which accounts for 9%. The remaining 5% of the business done on registered exchanges is shared by 19 little stockmarkets throughout the land. The presidents of these little exchanges are just as concerned about their problems as the New York Stock Exchange's Charles Richard Gay or the Curb's Fred C. Moffatt. In Cleveland last week they complained bitterly about present high margin requirements (55%) which, they feel, are driving speculators to foreign markets or into other fields like real estate or commodities. Soothing speeches from SEChairman James McCauley Landis and other Federal market policemen failed to quiet their fears. Moreover, Federal regulation itself seemed to be favoring Manhattan markets at the expense of the little exchanges. They have lost a good number of securities because corporations preferred delisting to filing a registration statement. Furthermore, because a listing on a small exchange requires the same painful revelations as on the New York Stock Exchange, corporations tended to seek listing there in addition to a listing on a local market. When that happens local trading generally begins to dry up. Some small exchanges, like those in Buffalo, Denver and Hartford, have simply closed their doors. The Los Angeles Curb merged with the Los Angeles Stock Exchange, the California Stock Exchange with the San Francisco Stock Exchange. Three were put out of business by the SEC --the New York Mining Exchange, the securities end of the New York Produce Exchange and the notorious Boston Curb.

Markets temporarily exempt from registration include ones like the Wheeling, W. Va., the Louisville, Ky. and the Reno, Nev. exchanges. On the Richmond Stock Exchange Virginians dabble in tobaccos, local utilities, Southern bank and insurance shares. The Seattle Stock Exchange is divided between mining issues and Pacific Coast industries like Jantzen Knitting (bathing suits), Carnation Co. (milk) and Alaska Pacific Salmon.

Next to the Big Board and the Curb the leading U. S. stockmarket is the Boston Stock Exchange, a large part of whose volume is made up of trading in standard stocks with a State Street flavor. The Chicago Stock Exchange ranks fourth, the San Francisco Stock Exchange fifth. Smallest registered market is the New York Real Estate Securities Exchange, where, during the depth of Depression, days would pass without a single sale. Typical little stockmarkets are the following:

Cincinnati's exchange is a two-room affair on the second floor of the Dixie Terminal Building. In size it ranks 14th among registered markets, which means that the total value of transactions amounts to about $400,000 per month. The Cincinnati Exchange provides large, deep couches for its members, who spend a large part of their time on the floor playing pinochle.

President Willis David Gradison, 37, has been in office longer than the head of any other U. S. Stock Exchange, is now serving his seventh term. A husky, ruddy, six-footer, who dislikes suspenders and garters, he is chairman of the City of Cincinnati's finance committee, which has had no small part keeping the city's credit at the top of the municipal list.

St. Louis has an exchange about one-half the size of Cincinnati's. Last week one of its 50 seats sold for $1,500 compared to a 1929 high of $20,000. The St. Louis market is largely investment, and 90 out of the 100 issues traded are local. A thousand shares is currently a big day. President is Benjamin Franklin Jacobs, 57, a cordial, smartly-dressed broker who thinks that the SEC is a very good thing indeed.

Pittsburgh's market, which grew out of an oldtime oil exchange, is housed in a one-story building on Fourth Avenue, Pittsburgh's Wall Street. About $30,000,000 worth of stock changed hands there last year, giving it ninth place in the list of registered exchanges. Most active stock last year was Carnegie Metals, which has nothing to do with steel. The company owns gold and silver mines in Mexico. Another Pittsburgh favorite is San Toy Mining, which also owns Mexican mines. One hundred shares of San Toy cost $2. President of the Pittsburgh Exchange is Ralph Struthers Richards, a spruce, popular socialite who heads one of the biggest brokerage houses in Pittsburgh, Kay, Richards & Co.

Philadelphia boasts the oldest Stock Exchange in the country. It was formally organized in 1790, though an informal market was established nearly a half century earlier. Listings in those days included broadcloth and slaves. Before the telegraph, quotations were dispatched to Manhattan in ten minutes with semaphore systems. For the past 75 years Philadelphia has been asking for quotations from Manhattan, and the importance of its Stock Exchange has dropped below that of even Boston, San Francisco or Chicago.

For the past two or three decades neither the practices nor the policies of the Philadelphia Stock Exchange have changed materially. President Howard Butcher Jr., senior partner in a local brokerage firm, carries on the ancient traditions despite the half-hearted threats of revolt by younger members. Excitement is occasionally provided on the floor by Salt Dome Oil, a mysterious issue which moves as much as 12 points between sales. As characteristic of the Philadelphia Stock Exchange today as it was in the 1870's is a deal of fast trading in local traction securities, foundation of most of Philadelphia's many fortunes.

*There are no Stock Exchanges in Puerto Rico or Alaska.

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