Page 2, 11th November 1938

11th November 1938
Page 2
Page 2, 11th November 1938 — STOCK EXCHANGE LOSING TOUCH WITH

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By Our City Editor Upon the Government's proposals for the prevention of fraud in relation to investments, which are to be laid before Parliament during the new session, may easily depend the ultimate future of the London Stock Exchange in its present rather insular constitution. By granting annual Board of Trade licences to approved firms of outside stockbrokers, the whole business of stock and share dealing will be placed on a new footing. Firms in this position will have a definite status, and, with the right to advertise their services, should produce serious competition for the Stock Exchange brokers, who are hampered by antiquated rules, and are debarred from circularising other than their own clients.

It has been increasingly apparent during the past twelvemonth that the Stock Exchange has for long lost touch with realities. Today, practically all broker-members profess perplexity at the paucity of new business; the old, and comparatively limited, circle of upper and upper-middle class clients have been approached, but without success. The reason for this is not far to seek; the class upon which the Stock Exchange formerly depended for its business no longer has the same surplus of income available for speculation, while their capital is already frozen in markets at much higher prices.

Education In Investment

It is high time those in authority in the Stock Exchange recognised that there has Laken place in this country since the War a real redistribution of wealth out of the hands of the leisured few into the hands of the middle-classes, and that the ranks of the investor have broadened enormously to include thousands of smaller people who are on the look-out for investment outlets for their savings.

Moreover, education has led to a different attitude on the part of the masses in

handling their monetary affairs. In days gone by, the wage-earner was content to hoard his savings under his mattress, and the fact that they were entirely unproductive troubled him not at all. Today, however, the smallest country post-offices display posters advertising Government saving schemes, offering interest at the rate of 2} per cent,

Advertising the Remedy

In view of these facts, it is clear that if the Stock Exchange is to maintain its place as a leading financial institution, it must lay itself out to cater for this new class of investor, and in order to do so must develop an entirely new technique in the sale of its wares.

The Building Societies and Unit Trusts have discovered the wisdom of popularising investment to the tune of many millions, a

great deal of which money might have been attracted to the " House " for stock investment rather than have been diverted into these competitive channels. That there is ample money available for investment there is no question, but to imagine that it should flow through the comparatively obscure channel of the Stock Exchange is to pursue the shortsightedness that has been largely responsible for the present Sharepushing Bill.

Investment funds are in the process of being dispersed, and are passing largely into the hands of smaller holders, the majority of whom have no idea how to approach stock investment

The opportunity is also a good one for a thorough investigation into the whole system of a central market, for the more or less irresponsible buying and selling of counters that bear less and less visible relation to the property they cover. On the one side you have the irresponsible control by a few of the real wealth and credit of the nation, " the life-blood " of industry, as Popes have called it; and on the other thousands of little speculators, too often victims of the big men and of their own greed.

Investment Suggestion for £50

Meanwhile the ordinary man has to work the system as intelligently as he can, and for those who may consider picking up small parcels of shares for the outlay of round sums, here is a list designed for the investment of £50 spread, in sums of about £10, over five shares to give an attractive

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