Nia Martin

Essay Two - Rough Draft

ENGW 104-24

Investment Banking and the Capital Market

On Thursday, March 17, 1938, John W. Hanes eloquently addressed a major

issue in relation to investment banking and the capital market. Hanes educated his

listeners of the Investment Bankers Association of America on why it is essential to use

investment banking to help the national economy. By emphasizing the need to

reevaluate how investment bankers are doing their job, it opens up an opportunity for

solutions to the problems facing the American economy. He also shows that just

because it may seem like there aren’t any opportunities for investment bankers to make

change in society, there is, just by completing their job and considering the people who

will be affected.

Being that John W. Hanes served under the Secretary of the United States

Treasury, he was able to provide an outside critical analysis of his perception of the

investment banking industry. He was also able to provide a perspective through the

judicial lense. Having diversity in opinion is what sparks innovation and allows for

improvement. His speech enabled the mass to be educated on a way to improve that

they otherwise may have never considered. In his speech, Hanes addresses the

problem that investment bankers have not been adequately fulfilling their job. He

explains that the job duties of an investment banker is to differentiate the good and bad

risks of a company by determining if the company has a future of if the company has
passed their zenith. Despite this explanation of the overall job description, he

challenges the audience to analyze the way in which they are completing these tasks.

Hanes criticizes the way in which investment bankers have been completing their jobs

and asks the audience whether or not they have been considerate of the national

economy. He does this through explaining the proper conduct of investment banking to

benefit the economy in a three part description. The first step being: Selecting situations

where capital can be employed productively and profitably over the long run. This step

is essential in ensuring that investment bankers are considering the long term effects of

a situation. The second step is taking into account possible risks in order to facilitate

raising capital for those concerns. This is important because in every action there is a

reaction whether it is positive or negative. Being prepared for the possible risks of a

situation will help decrease or even completely eliminate the negative impact of the

problem on the company and on the economy. The last step is the actual selling and

placing of the securities (financial assets). Hanes emphasizes that these three steps are

needed when investment banking because when only or primarily focusing on the

selling and placing of securities then it can result in a substantial negative impact on the

national economy. This exposes the need to be considerate of the lives that may be

affected by every investment banking situation.

Hanes speech entitled, “The Capital Market and The Investment Banker”

provides an outside perception of the importance of investment banking not just for the

company, but for the American economy and society. This is important to me because I

am very passionate about doing everything in my power to help others. Learning about
ways that I can help the American people in a job where helping American citizens isn’t

as transparent as other jobs, such as a firefighter, gives me peace of mind. Despite the

fact that Hanes stated this speech in 1938, I believe the overall ideas are still very

relevant today. In my opinion, investment bankers need to be considerate of the impact

their jobs has on the economy and how their actions can result in greater or less job

security for citizens. This is a reason why I am very interested in finance. Even though I

am not 100% sure I want to go into investment banking, I still love that with finance I

have a responsibility to help in the national economy.

 ● “certain minimum amount of capital investMent is re- quired in a complicated, mechan~zed industrial structure such
as ours, before people can be put to work efficiently and kept workin~.”
●
● To help ~aintain this s'ystem, we must prOVide the ~7.000 per​ ​man necessary to give work to the 500,0'0 or
more'persons who are added to our employable popUlation each year, and to all'those stra~ded on the relief rolls as
a result of the post-war depression.
○
● Problem: ​It ​is my impression that one of the causes of this stoppage, at the present time, is the fact that the
machinery provided by bankers and dealers throughout the country is not functioning adequately.
●
● Job Description + Challenges Audience: The oriQina-tion ​of s​ ~ourities, with all the work of findin~ the issue,
inv~stigating ~t, 1'1'ic~r.agndsettil1g​i..​up,isnosimplemat.ter.""hea(1Vel'ld.::;.Is.e~ll~i,ng, placing and replacing of an
issue are also not the sort of tasks Which permit ​J ​a banker to sit back and rest. But are you doing these jobs ~oday in
the same fashion as you used to and as you should if investment banking is to be an eco- nomlcally useful
occupation?
○ An investment banker is supposed to differentiate the good and bad risks of a company through -
Companies with a future vs. Companies who have passed their zenith.
○ “It’s poor economics and investment banking to be concerned with the success of an issue solely during the
period of its syndication (doing business with other corporations)
○ Once a banker finds a sound investment opportunity then begins selling the securities (tradable financial
asset) to investors.

For my Essay Two, I will be connecting a speech by John W. Hanes entitled, "The Capital Market And The
Investment Banker" to why I chose Finance as my major. I chose this essay because Hanes used this
opportunity to educate the listeners of the Investment Bankers Association of America on why it is
essential to use investment banking to create greater job security. This is important to me because I
have a passion for helping others and I have a passion for finance. I am a strong believer that in every
job and major there are opportunities to help others it's just a means of exposing them.

Your job for this essay is to provide a review of a strong piece of rhetoric written about your discipline or
major by a notable scholar or writer connected to your major. Take time to study the language used in
the writing and to provide a clear analysis of its audience, purpose, and context. Help readers to
understand why the piece you selected is important and for whom.