ir way to other localities where they are needed, with the
result that capital would lie idle or be very inefficiently employed
in some places while in others natural and human resources would be
undeveloped or very inefficiently developed.

Existing stock exchanges differ considerably in the manner in which
they are organized and managed, in methods of doing business, and in
the scope of their operations. Some of them are incorporated and
others unincorporated; some restrict their membership to a prescribed
number, others admit as many as are able and willing to comply with
the conditions imposed; some are local in their scope, some national,
and others international. In this country all the exchanges deal in
local securities chiefly, except the one in New York City, which is
national in its scope. The London exchange does a larger business in
international securities than any other, but the Paris and Berlin
exchanges, as well as those located at the other important European
capitals, and the one at New York share in it to a greater or less
degree.

Stock exchanges have suffered in reputation, and their real functions
and merits have been obscured by the abuses to which they have been
subjected. Connected with their legitimate business of facilitating
the investment of capital, various forms of speculation have
developed which in some cases have degenerated into gambling pure and
simple. The better managed ones have striven to rid themselves of
these abuses, and in some countries, notably in Germany, legislative
bodies have taken a hand. The results, however, have proved only
partially successful.

Some forms of speculation are not only legitimate but necessary in
modern business life, and these shade into the illegitimate,
unnecessary, and positively harmful forms by such short and easy steps
as to render it difficult, and perhaps impossible, to draw a line
between the two which can serve as a guide for regulations of an
administrative or legislative kind.

_6. Some Defects in Our Investment Banking Machinery_

A comparison of our investment banking machinery with that of European
countries, especially Germany, reveals important differences. Among
these the most notable are the wide use there and the almost complete
absence here of the following: (a) the resort to cooperation as a
means of revealing and making available the basis for credit of large
numbers of people who lack capital but could use it to the ad