530 
APPENDIX 
for loans of other character, and that such higher rates are not pro- 
hibited as usurious . . .” (Rates of Interest on Collateral Call 
Loans, Sen. Doc. 262, 66th Congress, 2nd Session, pp. 4-6). 
In 1929 steps were taken in Illinois to exempt call loans in Chicago 
from-the State usury law, in order to develop a Chicago call loan 
market on securities like that of New York. A similar development 
securred in Pennsylvania in order to assist placing the Philadelphia 
call loan market upon a less constrained and artificial basis. 
{(XIh) In 1890 call loan rates touched 186%; in 1892, 40%; in 
1893, 73%; in 1895, 100%; in 1896, 127%; in 1899, 186% ; in 1901, 
75%; in 1905, 125%; in 1906, 60% ; and in 1907, 125%, 
Since the establishment of the Federal Reserve system, the highest 
rate reached by call money was 32% in 1919. It must of course be 
borne in mind that all such rates are on a per annum basis, that of 
all outstanding call loans only a very few were actually contracted 
at those maximum rates, and that presumably borrowers at such rates 
paid them for one day only, and renewed their loans at a lower rate 
next day. See also the testimony of Dr. Adolph Miller of the Federal 
Reserve Board in the Stabilization hearings (p. 681). 
[n 1929 call loan rates touched 20% and for some months ruled 
unusually high, as a result of the Federal Reserve Board's attempt 
to deflate stock market loans. The wisdom or justification of this 
policy became a subject of active controversy. See the address en- 
titled “Stock Market Loans,” by President E. H. H. Simmons. May 
9, 1929, in Chicago. 
(XTi) The chief rules in the Stock Exchange Constitution dealing 
with the hypothecation of customers’ securities are Chapter XII. 
sections 2 and 4, reading as ¥ollows: 
Sec. 2. The improper use of a customer’s securities is inconsistent with 
just and equitable principles of trade. 
SEC. 4. An agreement between a member and a customer, authorizing 
the member to pledge securities, either alone or with other securities carried 
for the account of the customer, either for the amount due thereon, or for 
a greater amount, or to lend such securities, does not justify the member 
in pledging or loaning more of such securities than is fair and reasonable 
in view of the indebtedness of said customer to said member. 
(XIj) The accuracy with which renewal rates are made can readily 
be determined by comparing them over a period with the average 
call rates paid at the money desk on new loans. (The Annual Report 
of the President of the New York Stock Exchange for 1929-30 
‘p. 108) reports these differences between the annual average rate