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 XI. The security collateral loan market

Collection:: Economics Books

208 " THE WORK OF THE STOCK EXCHANGE insolvency. No other loan in this country, and perhaps in any country, has behind it as many protective features as our security call loans. For many years—even in the panic of 19o7—there has never occurred a case when Stock Exchange brokers with good collateral were actually unable to obtain the funds they needed. No brokerage firm in Wall Street with good security collateral has ever failed for lack of banking accommodation. On the other hand, even in the long memory of the oldest lending institutions in Wall Street, there is no record of any unpre- ventable loss by a lender on call loans made to a Stock Ex- change member on listed collateral. This sweeping yet justi- fiable statement attests the unique safety of properly made and managed call loans to the lenders. The supreme test of the safety of call loans was witnessed during the 1929 panic, when total borrowings on security col- lateral by New York Stock Exchange firms declined from $8,549,383,079 on October 1 to $4,016,598,769 on December —a liquidation of over $4,500,000,000 in two months— without the loss of a penny to a single lender. Such a liqui- dation is impossible to parallel in the history of the world’s money markets, either in amount or percentages. The safety of call loans has proved of very great benefit to country bankers particularly, since their business is often sub- ject to wide seasonal fluctuations between a shortage and a surplus of good local investments. Time and again, wisely managed country banks have saved themselves from a wave of local banking insolvency, by investing their funds largely in safe and liquid call loans. The Florida land crash a few years ago is only the most recent of many similar cases of this kind which could be cited. While it is true that call loans might be “frozen” by an enforced closing of the Stock Ex- change, this extreme eventuality has occurred only twice since 1817, and from causes which presumably would not cause a similar closing today.

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