History
479B
Devine
Fall
2012
Mitchell,
The Speculation Economy – Chapters 7-10
Chapter
7
- The author notes that the Panic
of 1907 resulted from a run on the banks. How was this run on the banks
related to the new speculation economy and the growth of the stock market?
(168)
- Why did the issue of
“uncertainty” lead many businesses contemplating mergers to support
federal regulations on corporations? (170-171)
- Why did Theodore Roosevelt’s
desire to be an activist president and his decision to make regulation of
the trusts his “crusade” end up undermining reform? (173-174)
- What two goals would be achieved
by corporations being required to release “publicity” about their
financial status? (174-175)
- The author notes the connections
between “the creation of the giant trusts, monopoly, speculation, and
investor fraud.” (176) What were the connections?
- What was the difference between
seeing securities regulation as
consumer protection and seeing securities regulation for consumer protection?
Why, in 1907, did the supporters of regulation not yet see
regulation as as
consumer protection? (177)
- What did Taft mean when he said
that finance had to be made to serve industry rather than the other way
around? (181-182)
- Why did many elected officials
(particularly those from outside the northeast part of the country)
believe that protecting investors/stockholders conflicted with protecting
consumers? (186-187)
- What was the difference between
common stock and bonds? Why was one
a safer investment than the other? (191)
Chapter 8
- As the twentieth century
proceeded, common stock became the investment of choice. How did this fuel
the speculation economy and lead companies to put “business” over
“industry”? What kind of leverage
did common stockholders have over companies? (196-197)
- Throughout the chapter, what
evidence does the author cite to support his contention that more “average
Americans” were becoming involved in the speculation economy?
- What factors helped draw more
investors of average means into the speculation economy? (204-205)
- How did stockholders’
expectations change during the early twentieth century? If they had once expected steady income
from dividends, what did they now expect from their investments in common
stock? (206)
- According to Mitchell, what was
the difference between pre-World War I stock buyers and post-World War I
stock buyers? How did this
difference demonstrate the larger trend toward a speculation economy?
(207)
- Why did some commentators believe
that “responsible speculation” was good for the economy and good for the
country? (208)
Chapter 9
- What were Woodrow Wilson’s views
on competition? On big business?
How were these views reflected in his approach to governmental
regulation of business? In what
ways was this “progressive” president also conservative? (212-214)
- How did the “yeoman farmer”
differ from the “yeoman stockholder”?
To an extent, both “owned” something, but what had changed? (215)
- How did Wilson’s belief in a regulated free
market affect his approach to securities regulation? (217)
[You may skip pages 219-234]
- Why were Wilson’s relations with
business so rocky even though he saw himself as a friend of business? (235-241)
Chapter 10
- How did banks get around laws
intended to keep them from becoming involved in securities markets? (246)
- How did the Liberty Loan drives
transform the American middle class into the American investing
class? (247, 251-254)
- How did the Liberty Loan drives
affect bankers and their relationships with potential investors? Why does Mitchell say the Loan drives
were “a graduate education for bankers”? (254-255)
- As businesses struggled to meet
war demand, why did they find access to capital was limited? Why was it paradoxical that the private
sector was competing with the government for capital? (256-257)
- Market forces generally
determined where capital was invested. How did World War I and the
mobilization effort change this and create a larger and far more intrusive
role for government? How was the Capital Issues Committee involved in
shaping the capital markets? (257-260)
- The Liberty Loan drives made
investors of many Americans. Why did this new reality spur new calls for
securities regulation? What did
reformers fear would happen now that so many people were “in the market”?
(261)
- Identify the three waves of stock
market development and the three stages of securities regulation.
(261-263)
- How might the proposed “Taylor bill” have
made the world “safe for stockholders”? Could one speculate that such legislation might have prevented the
“Great Crash” of 1929? (266-267)
Epilogue
- Why does the author conclude his
account of the speculation economy’s rise in 1919 rather than continuing
it through the Great Bull Market of the 1920s and the 1929 crash? What
larger point is he trying to make? (269-270)
- What are the pros and cons of
managerial control of corporations?
Do stockholders (and consumers) benefit or suffer when large
stockholders control corporate decisions? How does managerial control keep in check
the pressures exerted by the speculation economy? (271-274)
- How does CAPM separate stock from
business? (274-275)
- As managerial control broke down
during the 1970s, how did stockholder greed help to undermine American
corporations? (276-277)
- Would you rather that a company
in which you owned stock was controlled by concentrated ownership or a
dispersed ownership of stockholders?