ORGANIZED SECURITY MARKETS
51
better exercise their judgment as to the best time to buy or sell.
They are put on warning as to the feeling of the market in
respect to security values. Without dependable and current
quotations, dealing in securities could never be a really rational
business. Stock exchange quotations also serve to call the
attention of the public to particular companies and their pros-
pects, and by a sort of advertising to interest the public in
future ownership of them.
Since 1925, the swift increase in listings and volume of
dealings in shares on the Stock Exchange rendered obsolete
the old stock ticker machine, and considerable delay was con-
sequently occasioned before the new ticker machines could be
perfected and installed. Unfortunately, it was during this
interval that the panic of 1929 occurred, when late quotations
on the stock tape proved so considerable a source of public
confusion. Yet this episode only emphasizes the great service
performed under more normal conditions by the Stock Ex-
change in providing the public with current quotations.
5. Superior Collateral Value.—Since stock exchanges
confer superior marketability upon their listed securities, and
provide current and dependable price quotations for them, it
follows that these securities are preferred by money-lenders as
security collateral for loans. The lender knows that such
securities can readily be sold in case the loan which they secure
is not paid, and from their quotations he can assure himself
that their marketable value is sufficient for this purpose. This
is the reason why securities not listed on a stock exchange are
less acceptable as collateral to lenders, even though they may
be inherently as sound, or even sounder, than listed securities.
Lenders can protect themselves easily against securities of
doubtful value, or those selling at high prices, by increasing
margin requirements on their security loans and assigning
lower prices for the collateral securities as a basis for lending.
Thus, the principal danger with such loans which lenders must
watch, is the marketability of the collateral. . This accounts for
