The work of the Stock Exchange

Bibliographic data

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.

Chapter

Document type:: Monograph

Structure type:: Chapter

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

Collection:: Economics Books

STOCK SPECULATION—DANGERS AND BENEFITS 137 became all but impossible there. It is typical of all such attempts to abolish speculation that afterwards Lenin was forced to reinstate private speculative trading in fact, however much he continued to condemn it in theory. Other more intelligent critics, who realize the inevitable existence of speculation, have frequently taken the Stock Ex- “hange to task for the way speculation is conducted by brokers’ customers. Especially the amount of margin required by Stock Exchange houses!” has been attacked, since so many cases of loss to customers can be traced to buying stocks on small margins. Often, it is demanded'® that the Stock Exchange compel everyone to trade on a given fixed margin. Stock Exchange Attitude Toward Margins.—The mem- bers of the Stock Exchange must not for a moment be thought of as desiring to see their margin customers lose money. It must be remembered that the commission broker, through whom the public comes in contact with the Exchange, is not a dealer but a broker, and the agent of his customer. Far from making what his customers lose (like a croupier or other kind of gambler) the broker can derive no possible benefit from his customers’ losses. = On the other hand, these can frequently do him no little harm. For one perfectly selfish reason, he loses the account of that customer and the future commissions it might otherwise bring him. Between the hundreds of Ex- change commission houses there is a keen competition for accounts. Moreover, the broker may himself become involved in his customer’s catastrophe, by attempting to “carry him” after his margin is exhausted. Failures of brokerage houses have often been due to such overextension of credit to customers, who may be unable or simply unwilling to respond to margin calls. And the failure of a Stock Exchange firm may entail losses, 1" See Chapter VII, p. 184. . '8 ““We urge upon all brokers to discourage speculation upon small margins, and upon the Exchange to use its influence, and if necessary its power, to prevent members from Soliciting and generally accepting business on a less margin than 20%.” (Hughes Report, 1909, in Van Antwerp, p. 420.)

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