3c hapter - Index of
3c hapter - Index of
3c hapter - Index of
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200 Locavesting<br />
The exchanges were important institutions in their communities,<br />
both socially and commercially. To purchase shares listed on<br />
a regional exchange, investors would have to buy from one <strong>of</strong> its<br />
member- brokers, who were <strong>of</strong>ten prominent citizens in the community.<br />
Each exchange refl ected the unique character and industry<br />
<strong>of</strong> its region. On the Seattle exchange, for example, investors<br />
could fi nd hometown favorites such as Olympia Brewing, Alaska<br />
Pacifi c Salmon, and Carnation (acquired by Nestlé in 1985). In<br />
Richmond, Virginia, listings tended toward tobacco, local utilities,<br />
and southern banks. The Cincinnati Stock Exchange, created in<br />
1885, nurtured young Midwestern companies including a soap<br />
maker called Procter & Gamble, a tire maker called Goodyear,<br />
and a grocer named Kroger. Its brokers didn’t do too badly either.<br />
According to one account, the Cincinnati exchange provided<br />
“large, deep couches for its members, who spend a large part <strong>of</strong><br />
their time on the fl oor playing pinochle.” 2<br />
The history <strong>of</strong> the early exchanges has been largely forgotten,<br />
and few detailed accounts remain. But they were engines <strong>of</strong><br />
regional growth, facilitating the fl ow <strong>of</strong> capital into area business<br />
ventures and stoking their local economies. From 1790 through<br />
1930, the number <strong>of</strong> exchanges rose in tandem with U.S. industrial<br />
production, according to researchers at Franklin & Marshall<br />
College, who conducted one <strong>of</strong> the most comprehensive studies<br />
<strong>of</strong> the role <strong>of</strong> regional exchanges. To better assess the impact the<br />
exchanges had on local economies, the researchers compared<br />
data before and after the founding <strong>of</strong> each exchange to measure<br />
its effect on manufacturing employment (the dominant employer<br />
category at the time) in the area. In almost all cases, the increase<br />
in the population engaged in manufacturing was greater in the<br />
regions with stock exchanges than for the nation as a whole, leading<br />
the authors to conclude that regional stock exchanges are<br />
strongly associated with regional economic growth. On average,<br />
the regions with newly established exchanges saw a 175 percent<br />
increase in manufacturing engagement, compared to 76 percent for<br />
the nation as a whole. 3<br />
The landmark securities regulations <strong>of</strong> the 1930s, which<br />
imposed new registration and reporting requirements on publicly