Title: Wall Street: A History
Charles R. Geisst
Oxford University Press, 1999, New York.

Charles Geisst tells a gripping history of Wall Street, from a tiny congregation of traders along the side curb to the most influential financial market in the world. Looking at Wall Street's 200 years past, Geisst examines the factors contributing to its rise and its role in helping America become the world's most powerful economy. On the light side, he narrates the colourful lives and exploits of the Robber Barons who have come to symbolise Wall Street's predatory and free-wheeling past. This is definitely an engaging book but without being pedantic for history freaks. Geisst is one of many writers on the history of Wall Street who really knows and explains the intricacies of economics and finance at work in shaping the stock market, a rarity among the writers who normally adopt a historical approach to the subject matter.

Summary and analysis
Wall Street is a stock market and like many significant inventions of mankind, it cannot be attributed or traced to any particular person or society. Like money as a mean of exchange, stock market is created more out of necessity than anything else. Today, many stock markets have grown to such a scale that no one and no nation can muster enough resources to manipulate, let alone to control them. These markets seem to have taken lives of their own. Ironically, instead of we, the creators, governing these markets, they have grown to govern our lives for our fortunes are directly and indirectly interwoven with the boom and bust of these markets.

One of the great puzzles surrounding Wall Street is how and why it could have grown to become the world's largest stock market. To date, New York Stock Exchange dwarfs the rest of the world with its $US 8.6 trillion market capitalisation, exceeding the combined total of the next seven largest markets in the world and accounting for approximately 40 per cent of the world's capitalisation (see table below). Americans, undoubtedly, will attribute this phenomenon to their traditional values of hard work and self-reliance. Patriotism aside, Geisst ascribes it to more plausible factors like the resource-rich land of America, geographical isolation, the early Americans' distrust of the government in meddling in the otherwise laissez-faire economic, and increasing intervention by the government to safeguard public interests in the latter period. A quick history of Wall Street will illuminate why he has come to these conclusions.

Market Capitalization of Shares of Domestic Companies

As at March, 2003

(in millions of US dollars)

Ranking	Exchange	US$ millions	% of Total
1	NYSE	8,620,702	39.7%
2	Nasdaq	1,976,175	9.1%
3	Tokyo	1,938,660	8.9%
4	London	1,612,982	7.4%
5	Euronext *	1,351,363	6.2%
6	Deutsche Börse	619,040	2.9%
7	TSX Toronto Stock Exchange	599,435	2.8%
8	Swiss Exchange	491,370	2.3%
9	Spanish Exchanges (BME)	447,871	2.1%
10	Italian Exchange	445,514	2.1%
11	Hong Kong	439,652	2.0%
12	Australian	387,504	1.8%
13	Shanghai	345,531	1.6%
14	Taiwan	254,165	1.2%
15	Korea	175,829	0.8%
	Total	21,693,556	100.0%

* Euronext includes Amsterdam, Brussels, Lisbon, and Paris figures

Source : World Federation of Exchanges members (www.world-exchanges.org)

America in the 1790 was a land of unparalleled opportunity. The vast hinterland provided unlimited natural resources for the local growing population as well as for exports to Europe. The continuous stream of migrants offered a cheap pool of labours. Geographical isolation made America a relatively safe investment haven for Europeans, who still contributed the bulk of the investment into America. Wall Street, in its early days, traded mostly government bonds. There were much bonds in circulation then since public borrowing or the issuing of bonds was the preferred as well as the primary source of income for the government. Other channels like taxation was difficult to enforce in the relatively young and disparate nation. Too high a tax would only incur the wrath of the people, so would the printing of money by government which would lead to inflation and subsequently hardship for the people. This young nation who fought a recent hard-earned battle against the imperial Britain was rightly fearful of a strong central institution fashioned after the Bank of England - the central bank or the "Old Lady of Threadneedle Street." The centralised power of the Old Lady definitely would not please the Americans who were more concerned about their states rights than federal obligations. This gave a free rein on the development of early Wall Street and it lasted for a relatively long time.

During the Robber Barons period when Daniel Drew, Jay Gould, and Cornelius Vanderbilt accumulated spectacular wealth via chiancery and no holds barred activities, Wall Street operated more like a casino, nothing close to what we have today. However, the latter part of the nineteenth and early twentieth century slowly put to end the Robber Barons days when Wall Street had become too big to be manipulated by anyone. Fraud and swindle still persisted on the unsuspecting public but nothing the scale of the Robber Barons' days.

The days of free-wheeling came to abrupt stop after the Great Depression in 1929 when the government lashed out the New Deal legislation that severely shackled unfair trading practices. The Wall Street under the banner of free enterprise was replaced by the need for public safeguard. That was when the stock market began to resemble the current Wall Street.

In recent years we saw how accounting irregularities had led to the unmaking of WorldCom and Enron, the biggest two bankruptcies in America history. This prompted President Bush signing a bill to make penalties for white-collar criminals harsher and accounting practices more standardised.

This sort of tweaking process has persisted to today and will continue to do so in the future.

Laissez-faire system may have created Wall Street but meaningful regulations have made it what it is today. Capitalism in its truest sense, absolute hands-off attitude, is seldom found in any society. Most society has a mixture of both - laissez-faire and intervention.

Looking back at history, be it political, social or economic, tinkering or tweaking may be the better way in which a system improves upon itself. Using a modern parable to illustrate my point, take for example when a group of people moving into a previously uninhabited area to build a new town, they had not thought of town planning initially. Everyone started building houses, shops, markets and schools wherever they deemed most convenient. The town grew higgledly-piggledly with some roads too narrow; others too wide; some underutilised; other over congested. Then came a smart-aleck or philosopher-king who believed in proper planning, razed the town to ground and started rebuilding a new one from what he thought to be a blueprint for an ideal town. The "ideal" town, when completed, although resolved some of the problems previously faced, failed miserably in addressing other needs of the people. The philosopher-king, so caught up in his grandiose blueprint, did not notice the rubbish point was too near the residential area and the common lavatory too far. A better approach is to tinker with the existing model and make only the necessary amendments. Looking our modern cities, one could not but marvel at the beauty of the modern skyscrapers alongside each other, forming a majestic skyline; the wide variety of shops and restaurants scattered everywhere, to the convenience of the consumers. All these took place without the deliberated and micro planning of anyone or group of people.

Leo Kee Chye