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.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XI. The security collateral loan market

Collection:: Economics Books

SECURITY COLLATERAL LOAN MARKET 305 Thus, during the credit strain in 1920, commercial bankers were frequently assisted in the difficult task of readjusting and strengthening their position by being able to call in their out- standing security collateral loans and thus protect their fre- quently illiquid commercial loans. As the authorities of one of the largest Wall Street banks stated at the time. The crisis of 1920 demonstrated the fact that loans to the stock market were the most liquid resources which the New York banks possessed. . . . Loans to the stock market proved to be an ex- tremely valuable liquid resource, and the ability of the stock market to absorb securities, supplying the banks with new cash to lend for other purposes, eased the situation greatly. The much discussed commercial “deflation” of 1920-21 * revealed itself in the fall of total loans, discounts, and invest- ments of reporting Reserve members from their peak of $17,283,996,000 on October I5, 1920 to a low point of $14,726,585,000 on September 7» 1921. During the same period, stock market loans fell from $973,074,000 to $680,- 448,000. In percentages, a 14% deflation in total member bank loans, discounts and investments was thus accomplished largely by means of a g 5% deflation in stock market loans, of which 26% occurred before and 29% occurred after, the peak of all credit extension on October 1 5, 1920. The earlier ar- rival and greater severity of stock market than other deflation here revealed, is typical of the stock market’s function as a capital market for surplus funds,* and as a stabilizing factor in our capital and credit markets. The Size of Security Loans Outstanding.—The chief fac- tors responsible for increases and decreases in the outstanding amounts of stock market loans have to do with both money and securities. On the money or supply side, both capital and credit are conditioning factors. Capital, which represents wealth permanently saved from present consumption, results JA. Barton Hepburn and Benjamin M. Anderson, “The Gold and Rediscount Policy of the Federal] Reserve Banks,” The Chase Economic Bulletin, Vol. 1, No. 5. 2 See Appendix XIm, ¥ See Chapter II, p. 53

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