Speculation and Brokers’ Loans 221 
Undoubtedly the contagion of the long bull mar- 
ket had encouraged unwise speculation. But for the 
most part it was unwise in a peculiar sense, namely, 
that it would have been entirely proper had the spec- 
ulators used their own money in following a generally 
sound judgment to profit by reasonably expected 
gains in the future. 
Function of Brokers’ Loans 
Did brokers’ loans rise too high during the period 
preceding the panic? If so, should there be some 
method of governing their output and of restricting 
them to prevent undue speculation? 
President E. H. H. Simmons of the New York 
Stock Exchange, in an address before the Indiana 
Bankers’ Association at Evansville, September 11th, 
defended brokers’ loans, notwithstanding their abuse 
in inflating the stock market, and notwithstanding 
the discrimination against them embodied in the 
Federal Reserve Act. 
“To wipe out brokers’ loans or violently reduce 
them,” Mr. Simmons told the Indiana bankers, 
“would inevitably slow up American industry; if not 
totally halt its continued progress.” 
Before new securities will appeal to outright in- 
vestors, he pointed out, they must be seasoned. New 
industries and new extensions of industry need tre- 
mendous outlays if they are to get promptly into 
large-scale production, with its attendant economies 
and lower prices. 
This need is met, in part, by holding the new