The work of the Stock Exchange

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Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter V. The dangers and benefits of stock speculation

Collection:: Economics Books

STOCK SPECULATION—DANGERS AND BENEFITS 133 Collateral loans do not materially strain our money market because the money which flows into call loans arises from surplus banking funds.® This tends, of course, to restrict the amount of such loans, as the high call rates for money fre- quently indicate. Moreover, collateral loans are in a practical way often undesirable to lenders, since they cannot be redis- counted at Federal Reserve banks.!®* When, therefore, we get a proper and full perspective of security collateral loans in their relation to other loans, we cannot help realizing that they cannot be held responsible for serious credit shortages. Neither are collateral loans an economic waste, but a very necessary financial operation in behalf of the indispensable and necessary work which the stock speculator performs for business and society 1! Effect of Speculation upon Prices.—Another charge is frequently made against speculation in securities—that it “un- settles prices.” ** The fundamental cause for changing prices is, of course, changing values. In a market where values never changed there would never be any speculation. The more speculative character of the stock than the bond market is due to the fundamental fact that as a rule the value of bonds is less subject to change than the value of stocks. Speculation merely ‘ntervenes to adjust present prices to future but seemingly probable values. In this discounting of future conditions which results from speculation in stocks, we have seen that Stock Exchange price changes in the past have anticipated future changes in values. Naturally, such prophetic price changes are affected by human fallibility. Everyone, of course, knows that at the climax of a “bull market” prices for a time rise above what eventually turn out to be future values, and similarly at the end of a decline in the market, prices get below future values. Yet such conditions are only temporary, and it is ® See Chapter X-, p. 301. © See Chapter XI, p. 278. 1 See Chapters 1V, p. 105, and XI, p. 302, 12 See Appendix Vb.

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