46 The Stock Market Crash—dAnd After 
can Acceptance Council in New York, November 11, 
1929. Mr. Kent found one valid cause in the fact 
that margins were not sufficiently large to protect 
borrowers: : 
“If the base value of securities upon which mar- 
gins are figured had been at a point slightly below 
attractive investment prices measured by the interest 
value of current earnings against prices, is it not 
probable that the tragedy of those who were sold 
out would have been avoided?” Although there 
were stocks selling below even these margin require- 
ments, this plan would have helped, since it would 
have meant larger margins and better technical posi- 
tion of the market. But it should be borne in mind 
that margins were actually higher than before in 
the history of Wall Street, during this inflation 
period. Paradoxically, the situation was helped 
during the crash by reducing margins to 25 per cent 
of the market value of stocks. 
An economist who has made a special study 
of the subject says: “Stock Exchange mem- 
ber margins were actually very ample. Statistics 
covering the first six months of 1929 showed that 
the average Stock Exchange house was maintaining 
40 per cent margins on customers’ securities carried, 
65 per cent margins on customers’ debit balances, and 
the members’ collateral loans were margined with 
excess collateral to the extent of about 50 per cent. 
Naturally, no margin can protect the borrower from 
the price declines. The purpose of a margin is, of 
course, to protect lenders rather than borrowers.