An Evaluation of Automation for Stock Exchange Firms
BY PAUL W. PINKERTON Partner, New York Office
Presented at the Second Annual Automation Seminar Sponsored by The New York Association of Stock Exchange Firms — October 1957
THE SECURITIES INDUSTRY
In his annual report of the New York Stock Exchange for the year
1956, Mr. Funston said, "The Exchange community must continue to expand its educational, sales, and merchandising facilities; must keep its costs low by adapting modern facilities and equipment to the needs of the securities industry; and must work continuously to attract and train young people of talent and promise." In previous annual reports, Mr. Funston had mentioned the first and last of these, but the need to keep costs low was introduced this year for the first time.
This emphasis on costs is largely a recognition of the constantly increasing clerical cost with which the country has been faced. The increased cost is compounded of the expanding need for clerical effort and the decreasing productivity of the individual which seem to be in evidence everywhere. A good segment of the expanded clerical force is a reflection of the sharp growth of credit and investment activities in which the securi-ties brokerage firms play such an important part.
Let me refresh your memories with a few statistics. The average daily round-lot volume on the New York Stock Exchange in 1946 was 1.4 million
shares; in 1956 it was 2.2 million, an increase of 60 per cent. The number of offices of brokerage firms grew from 1,400 in 1947 to 2,400 in
1957, an increase of 70 per cent. The estimated number of shareholders of publicly held corporations increased by one-third during the four years from 1952 to 1956, to over 8,500,000. And the number of producing personnel of brokerage firms doubled during the ten years from 1947 to 1957. It stands to reason that this increase from 12,000 to 24,000 producers
was bound to cause increased activity in the back office. I don't have figures for earlier years, but the number of non-producing (and I don't like that word any better than you do) — the number of non-producing