254 The Stock Market Crash—And After 
demand for this type of loan, to pay a high rate of 
interest; but looking back over several years we find 
that the rate was usually around between 3 and 4 
per cent and has only occasionally risen above 6 per 
cent. This is as it should be, since, if the lender 
accepts only the minimum of risk, he should also 
receive only the minimum return. 
In my plan the accepter of the option agreement 
voluntarily assumes a certain share of the risk for 
which he receives a relatively high payment in return. 
The purchaser of these securities assumes the larger 
part of the risk, and is in a position to receive the 
larger part of the profit in the event of advance in 
price. He is also willing to pay more highly for 
the funds that he is borrowing, since he is assured 
of not being sold out in the event of a decline. 
It is essentially a method of financing purchases 
for the “long pull.” It is not suitable for the trader 
who desires to be in and out of the market. The 
volume of stock retained for long-term holding is 
probably far greater in total than that used by the 
trader, and were it lifted from the marginal loan 
system there would be little opportunity for a break 
of large magnitude to develop. But even should it 
develop, the makers of these option agreements 
would find their holdings undisturbed. 
There was one difficulty that I found, however, 
in making these option agreements. That was the 
lack of an organized financial institution equipped 
to make contracts of this character. It was therefore 
necessary for me to approach private investors, and