SECURITY COLLATERAL LOAN MARKET 201

consists in the face of the envelope itself, made out as above
described

Diversification of Security Collateral.—One reason for
the essential safety of security loans consists in the care exercised
 in diversifying their collateral. Each loan is thus a sort
of miniature investment trust. The high degree of organization
 in the security loan market has developed an extensive
technical practice in this respect.
Years ago, American railway shares constituted a larger
proportion of Stock Exchange turnover and listings than today,
 and were in addition more stable as a rule than American
industrial shares. In consequence, many “all-rail” loans used
to be made, as follows:

ALL-RAIL Loan oF $100,000
Based entirely on railroad stocks. Margin about 299%,
200 Delaware & Hudson R. R. at 190. . t
100 New York Central R. R. at 193..
300 Erie R. R. at 78...
200 Northern Pacific R. R. at 103...
200 Illinois Central R. R. at 138..

38,000
9,300
3,400
‘0c

[,000

As industrial issues assumed increasing importance ang
stability in the market, they came to be included in loan collateral.
 Thus additional diversification was provided. In fact,
before the war, the favorite selection of such collateral consisted
 of two-thirds rails and one-third industrials, and was
known as the “regular” loan on “mixed” collateral.
OLp RecuLAr LoaN oF $100,000
Based on mixed collateral, %3 rails and 14 industrials.
about ; -
200 Southern Railway at 138..
300 Pennsylvania R. R. at 77...
300 Baltimore & Ohio R. R. at 124.
200 Consolidated Gas at FIZ cnvanevinnn
200 American & Foreign Power at 104.

27,400
23,100
37,200
22,600
20.800

[ 200

$121.100