CREDIT TRANSACTIONS IN SECURITIES 181 
create about our stock markets largely explains why it is that 
certain newspapers and magazines which year in and year out 
accept the yearly subscription price for their journals in ex- 
change for their promise to complete the deferred delivery of 
them to the subscribers a whole year afterwards, will so often 
express horror at “short sales” on the Stock Exchange, be- 
cause, forsooth, they involve “selling what one doesn’t own.” 
Purchasing Securities on Credit.—In actual fact, then, 
“buying on margin” is simply the financial phrase for purchas- 
ing securities by employing credit to defer a payment of 
money ; the same basic operation is known as “purchasing on 
credit” in some branches of commercial business. “Selling 
short,” on the other hand, is simply the phrase used in finance 
to designate a sale of securities in which credit is used to defer 
their delivery; in its economic essentials this operation corre- 
sponds to what merchants and manufacturers often call selling 
for “forward” or “future delivery.” An investor or speculator 
who has bought stocks on margin is said to be “long” of stocks; 
whereas if he has sold them but has not yet delivered them, he 
is said to be “short” of stocks. Furthermore, the speculator 
who buys stock on margin in the expectation of seeing a rise in 
its price which will subsequently enable him to sell it at a profit, 
is called a “bull,” while the name of “bear” is given to anyone 
who sells a stock short in the anticipation that its price will 
shortly decline so that he can buy it to “cover” his sale (i.e., 
make his deferred delivery of the stock) at a lower price and 
obtain a profit. 
Thus Stock Exchange transactions, when stripped of the 
hectic and unfamiliar verbiage with which the financial scribe 
so often invests them, resolve themselves into a few common- 
place and immemorial practices of trade which exist just as 
extensively, although unhonored and unsung, in every grocery 
store and newsstand in the nation. 
Margin Purchase of 100 Steel—That the principles in- 
volved in purchasing securities on credit are fundamentally