The search for personal wealth

Investing, once practiced only by the monied class, is now available to everyone.

A.D. 1950 -- Workers' Top Concern After enduring the Great Depression and surviving World War II, I'm looking for just one thing - security.

Call it almost a full circle: 1,000 years ago, before the Norman Conquest, Marco Polo's long trip to China, or the rise of the Industrial Revolution, few individuals had personal financial assets.

Currency was scarce. Personal value was based largely on one's unremitting toil. Transactions were frequently paid for through barter. Wampum - strings of beads and pelts - were traded in the American colonies right up into the 1600s.

Ironically, the high-tech, warp-speed world of the Internet Age is moving right back to that paperless, currency-less world of the past. Although many ordinary individuals now own personal assets that would have been the envy of people in centuries past, much of today's wealth is measured not by actual coins or currency, but electronic impulses in computer grids.

Paychecks are increasingly directly deposited to one's bank account. Bills are paid over the telephone, or via computer. Trans- actions for food, gasoline, and clothing are posted to credit- or debit-card accounts. And wealth is made through one's own investments, routed via computer systems through global trading markets.

The financial world of 2000 is far richer by any measurement than the world of 1000. When President Clinton stood before Congress for his last State of the Union address in January and said that never have individuals in his nation had such a strong economy, he was speaking the truth not just for his fellow countrymen, but for countless citizens of the world.

Yes, poverty and economic injustice can still be found in many societies, including the United States. Yet, the underlying reality is that never have so many individuals possessed so much wealth in the long stretch of human history as now. And barring global recessions - or depression - the expansion of personal wealth is expected to continue into the 21st century.

Political and economic theorists argue over the exact origin of this enormous burst of prosperity. Was it the rise of the printing press in the 15th century, or the establishment of great universities during the Middle Ages? Much of the credit would have to go to the entrepreneurship that accompanied and spurred on the Industrial Revolution of the 19th century and the Computer Revolution of the 20th century.

Both transformations were in large part the result of the rise of the private stock company, where individual citizens could invest their savings to gain unknown financial returns from bold new ventures. Shareholders held limited liability, protecting their personal assets in case the company went belly up.

Stock companies began in Northern Europe in places such as England and the Netherlands. They financed voyages to the New World, the development of the fur trade in North America, the steam engines and railroads of the 1800s, and thousands of businesses that made every type of product imaginable.

At first, stock companies were owned entirely by the wealthy. Even today, the great bulk of financial assets in the US are held by a relatively small percentage of individuals.

And yet, look what else has happened: Roughly one half of all American families now hold stocks, often through company pension plans or contributory retirement programs. Lone individual traders, armed with just a keyboard and computer screen, can directly affect the share prices of companies. And the stock exchanges have become more encompassing, moving toward 24-hour trading. World finance has become increasingly globalized - a trend likely to continue into the new millennium.

In the US, at first, a stock exchange meant just a few individuals (all men) sitting around a buttonwood tree in 1792 at 68 Wall Street in New York City. Now, there are diverse financial exchanges here and abroad. They can be found in scores of countries, from Estonia to Sri Lanka to Zimbabwe.

The New York Stock Exchange (still on Wall Street) lists companies from all over the world. Many (if still not enough) of today's traders are women, and members of minority racial and ethnic communities.

The last half of the 20th century witnessed the rise of entire industries managing the money of individual citizens, such as the US mutual-fund industry, says Dr. George Perry, senior fellow in economic studies at the Brookings Institution in Washington. Competition among financial institutions will continue to grow, he says.

The 20th century was also a time of economic upheaval and catastrophe. Market crashes used to come and go each generation, although they were often called "panics." But there was no mistaking the severity of the financial panic that gripped the US in late 1929 - as the stock market crashed, quickly wiping out $14 billion in market value and helping to usher in the Great Depression of the 1930s.

But in the caldron of the depression, industrial nations, including the US, sought to reform and democratize financial markets. Securities trading was carefully regulated. Brokers had to be licensed.

President Franklin Delano Roosevelt's New Deal may not have been the political choice of die-hard capitalists. But the era of reform in the 1930s saved and modernized capitalism and investment trading.

Have Americans, and others for that matter, forgotten the lessons of 1929 - or the market crash of 1987? "Or taken the wrong lessons from 1987?" asks Dr. Perry, noting how quickly the market roared back and produced years of record-breaking market gains. Perry wonders if today's investors have unrealistic expectations about what they can achieve from investing.

Or the dangers of excess.

Still, the computerization of the global economy has not only emboldened but "empowered the individual" as never before, says Hans Stoll, director of the Financial Markets Research Center at Vanderbilt University, in Nashville, Tenn.

Individuals are increasingly able to create and self-direct their own financial portfolios, Mr. Stoll notes.

Today, despite day-to-day gyrations, money still pours into stock markets. Reformers, meantime, seek to expand the circle of prosperity, ensuring that all citizens of the world have access to financial instruments, opportunity, and success.

Moreover, individuals, through socially responsible investing, demand more from today's corporation. Increasingly, companies will have to earn their investment dollars through more enlightened business and social practices.

"Transglobal corporations are increasingly going to be forced to be more accountable to the public," says Ritchie Lowrie, a professor of sociology at Boston College.

(c) Copyright 2000. The Christian Science Publishing Society