308 THE WORK OF THE STOCK EXCHANGE 
stock market under great pressure from the money market. 
In 1929 no credit shortage was actually present. Although 
call rates had risen high in the spring, they stood at about 6% 
only when the stock market decline began in the fall; at no 
time during the panic did call rates exceed 7%, and after it 
they became unusually low. This absence of money market 
pressure on the stock market partially accounts for the fact 
that in 1929 the stock market did not discount far in advance 
the trade depression, the fall in commodity prices, and the 
liquidation of commercial loans, as it had in 1919-20. In both 
periods, inflation occurred not only in the stock market but 
also in trade and industry. Concerning call loans in 1929, 
however, the really significant fact is that, had the funds em- 
ployed in stock market credits been employed in commercial 
loans instead, the commercial and industrial inflation would 
have been vastly worse than it actually was. For, as nature 
abhors a vacuum, just so banks abhor idle funds. Artificial 
restriction of brokers’ loans in the face of a national surplus 
of credit and capital could only have resulted in an even more 
dangerous and undesirable inflation of commercial loans. The 
principal moral seems to be, that an increased tendency toward 
stock market inflation is to some extent the price of being a 
creditor nation and having a genuine surplus of funds. 
Term Settlements.—The New York Stock Exchange has 
long been urged to adopt term settlements of the sort practised 
on European stock exchanges, in order to place stock market 
financing on a time loan rather than a call loan basis, and to 
increase the efficiency of its central clearance and settlement. 
The authorities of the Exchange have been less inclined to 
consider the term settlement any panacea.”* In 1926 the author 
made an extensive study of the question in London, Paris, and 
Berlin, and 1927 supplemented it by further researches in 
Amsterdam, Milan, Vienna, and other European centers. In 
his opinion, a term settlement could not prove in New York as 
See Address of President E. H. H. Simmons, “Speculation in Securities” befor