The method, therefore, in common use, and the only one which has been found effective by financiers, is to create a demand for the security, encourage speculation, establish an active market, and dispose of stock on the market as necessity demands whenever financing is required. This implies and necessitates that the inside interests must support the security in the open market. Therefore, it becomes necessary for the successful marketing of the stock by the promoters, once a demand is created and public buying is under way, that stockholders shall be kept in full touch with the latest transpirations on the property and in the market--be furnished with news concerning their interests so that they may judge the value of their stockholdings. This process is particularly essential during the financing period of the company and the security-digesting period of the public.
In fine, the ultimate purpose in this regard of all the promotion machinery of Wall Street--the machinery that has been putting out billions of dollars' worth of securities to investors--is to place stock where it will "stay put," that is, not come out on the open market again to embarrass the interests that are behind the enterprise, and who for a long period are compelled to support the market.
On the question of the ethics of market support by "the inside," a whole tome could be written. I will not attempt to discuss the subject at length here. Suffice it to say that in my opinion "inside" support of a listed security is not base when it is done with a view to creating a broad market, to stimulate public interest, and to increase the price to a point within the bounds of intrinsic plus reasonable speculative worth. Support of the market to the point of stimulation is moral obliquity, however, when dishonestly performed for the sole benefit of the "inside" and to the hurt of the stockholder. This sort of market support is only a shade less reprehensible than manipulation that has for its purpose the reduction of the market price of a security to beneath its real value, which, in my opinion, is nearly always infamous.
I might place myself on record right here to the effect that only once did I ever "bear" a stock from "the inside," and on that occasion it was a temporary affair, caused by a desire to secure at a reduced price a big block of stock that was pressing for sale from a quarter that I was under no obligation to. Even in that instance I gave the investor much of the benefit my associates secured by letting him have stock at the same figure at which "the inside" secured it. Nor have I ever tried to push the price of a stock to a higher level than that which I considered warranted by the reasonable speculative and demonstrated intrinsic value behind the security.