A Nation of Small Shareholders: Marketing Wall Street after World War II by Janice M. Traflet (review)

This book has at its heart the simple but important question: how and why did Americans come to trust the stock market again after the 1929 Wall Street Crash? This calamity left a deep mark: in the early 1950s, popular participation in the market was still well below 1920s levels, even though incomes and savings had both grown significantly since 1940. Traflet sees the answer in the New York Stock Exchange (NYSE)’s belated embrace of modern marketing methods in the second half of the century, which allowed it to reinvent itself in the minds of the American people as an attractive—and above all safe—destination for their spare cash.

Arranged chronologically, the book starts by examining the fallout from 1929. Interestingly, the public relations disaster for the NYSE began not in 1929, but in 1933. The Exchange’s half-hearted attempts at reforming itself, together with an obvious unconcern for the fate of investors who had lost money, meant that attacks on it, from the President down, won considerable public backing. The nadir came in 1938 when a former NYSE President was found to have misappropriated funds from the Stock Market’s Gratuity Fund. The resulting scandal gave reformers inside the NYSE the opportunity to seize control and implement sweeping structural changes. Reforming the Exchange was one thing, however: according to Traflet, the more difficult job was persuading the public that it had changed its ways.

One of the main obstacles to this job of persuasion was the fact that the NYSE held a very dim view of the merits of advertising, whether by member firms or by the Board of Governors itself. Though consumer goods and automobile manufacturers had long since appreciated the value of advertising, it retained an air of vulgarity for some, and before the Second World War it was largely eschewed. Selling war bonds from 1941 neither helped to revive the equity market nor did much lasting reputational good for Wall Street despite the opportunity the war gave the NYSE to pose as a quasi-public institution. However, it did have one important consequence. In sponsoring war bond messages, the NYSE became more accustomed to advertising and crucially, when the war ended, the Board of Governors not only kept on its advertising space in newspapers, but also hired an advertising agency to improve its public image. The war bond promotions were replaced with new advertisements celebrating the NYSE as operating “in the national interest.”

This was an important turning point, but Traflet stresses that the advertising drive was still a general exercise in public relations, rather than a concerted effort to widen the shareholding base. It was not until the 1950s that the campaign, which is at the heart of this book, was developed. The campaign was made possible by the appointment of two marketing experts—who had very little experience of the markets—to senior positions in the NYSE: G. Keith Funston was made President of the NYSE in 1951, and Ruddick Lawrence was appointed the first head of the new Market Development Department in 1953. Early the following year the “Own Your Share of American Business” campaign was launched: the first time the Board had directly courted the US public as investors. The remainder of the book explores the development and impact of this campaign and related phenomenon through to the end of the 1960s, when it was finally wound up.

Such a brief summary might make this sound like a straightforward story of gradual institutional adjustment to the necessity of advertising and PR in a modern economy, but it is more complicated than that. One of the strengths of the book is the fascinating light it sheds on elite attitudes to small investors. The “little fellow” was a popular figure of abuse after 1929: prone to overoptimism and then to panic, he had...