The Psychology of Speculation by Henry Howard Harper

It is a popular belief with many people that the stock exchanges are / highly prejudicial to the public interest and to public safety; as if / they actually manufacture stocks, fix their price, and sell them to the / public. It is also believed by many persons -- even by men with enough / brains to buy and sell securities -- that whatever they lose on their / transactions is gained by the stock exchange or the broker through / whom they trade; and that the brokers on the floor of the exchange / plan out each day's campaign and manipulate the stocks with utter / disregard of the outside world. Furthermore, it is commonly supposed / by a certain class of uninformed people that stock exchanges create / panics and financial depressions; that they are licensed evils, feeding / and fattening upon the credulity of an innocent public. Nothing could / be farther from the truth; nothing could disclose a more profound / ignorance of existent facts than for one to adhere to any or all of / these fallacious beliefs. The stock exchange itself has no more control / over the price of securities than it has over the ocean tides. It is / merely an auction room where anyone may send in orders to sell stocks / and bonds, either at a certain asking price, or "at market" to the / highest bidder. On the other hand anyone may put in either a limited / or "at market" bid for whatever securities he wants, provided they are / on the list admitted for trading; and no securities are so admitted / without being passed upon by a committee of competent judges whose / duty it is thoroughly to investigate every company before admitting / its securities to the board.

The great value of this service to both / traders and investors is plainly evident. The people who run the / exchange have no other privileges, prerogatives or authority than to / buy and sell securities on their own account, or to act as buying and / selling agents for the public, and to execute their orders precisely / in accordance with given directions. The interests of the public are / safeguarded by every known precautionary device, and if a broker makes / a mistake he stands the loss, regardless of what the amount may be. In / this connection, those who have stood in the visitors' gallery of the / New York Stock Exchange on a busy day have been induced to wonder how / it is possible for the brokers to avoid errors under such seemingly / chaotic conditions as exist there. To the onlooker it resembles a / riotous mob scene in a modern cinema, and one might easily mistake it / for a place where a lot of frantic men are trying to buy insurance on / a sinking ship, instead of dealing in gilt edge securities which are / not immediately perishable. A benevolent sweet-natured old lady who / stood for a time looking down upon this wild confusion was asked what / she thought of it. "I think it's all very interesting," she said. Then / after some reflection she added: "But my husband never told me that we / are in a financial panic. And even so, why should the men get so angry / with one another?"