On the basis of the brief descriptions above given, it is apparent that floating new issues exclusively through stock exchange operations is a somewhat uncertain process, and moreover is suitable only for securities of a distinctly speculative character. The expense and risk of floating a comparatively small issue by this method are seldom justified.

Just how expensive an operation of this character is likely to prove is a question that cannot be satisfactorily answered. It is evident, however, that even though it may be completely and quickly successful, there must be a large outlay for brokerage commissions alone. The buying and selling transactions must total a great many times the nominal value of the issue which is being floated, and a commission of 1/8% on each transaction may easily amount to a considerable sum. In addition, the risk undertaken by the underwriting syndicate must necessarily be offset by the possibility of earning a large profit. On the whole, it is questionable whether the average expense of selling by this method is any less than by the other methods that have been described.

It does not follow, however, that every new security which is listed on the stock exchange and immediately becomes active is in process of flotation through stock exchange manipulation. It is often the case that the security is listed simply as an incident to its flotation, and is allowed practically to take its own course except for receiving some support from time to time in case its price tends to sag below the direct "over the counter" price. In this case the fact that the security is listed, and that its quoted price is slightly above the "over the counter" price, is a powerful and legitimate aid in selling the security. There can be no question but that any security which enjoys the advantage of being listed and of having a regular market is, for that very reason, worth more than a security of equally high intrinsic value which is not so readily marketable.

It should be mentioned in this connection, that the faulty banking system which existed in the United States prior to the inauguration of the Federal Reserve Act in November, 1914, tended to concentrate call loan money in the New York market and thereby fostered speculation on the New York Stock Exchange. The result was an overconcentration of interests on a limited number of large and highly speculative issues, to the detriment of other issues. On the London and other stock exchanges this tendency is not so prominent; on the contrary, vast numbers of securities issued by governments and corporations in all quarters of the world are dealt in, and the interest of the purchasing public is spread with some degree of uniformity over the whole list.

It is greatly to be hoped that under the new banking system in this country a similar decentralization of call loan money and of speculative interest will take place. If this proves to be the case the great gambling operations in speculative issues will become a less prominent feature of the stock markets and the volume of actual buying and selling will proportionately increase. This tendency will favor many of the smaller stock exchanges of the country, and especially will tend to favor the smaller corporations which have previously been unable to secure for themselves the attention that their securities deserve.