300 THE WORK OF THE STOCK EXCHANGE 
but inevitably necessary in any country whose government or 
whose business companies depend on security issuance and 
distribution. Without the wisely provided facilities for carry- 
ing Liberty bonds in collateral loans (which incidentally proved 
highly speculative to millions of holders, and yet which were 
rediscountable at the Reserve banks), those enormous war 
issues could not have been effectively distributed. 
Thus the economic services of security call loans might be 
briefly summarized as providing lenders with safe, liquid and 
flexible investments and thereby minimizing commodity or land 
inflation, and borrowers with funds which, while immediately 
used in security speculation and investment, ultimately facili- 
tate the security distribution necessary to mass production, low 
manufacturing costs, high wages and high average standards 
of living in this countrv.?® 
Preference for Commercial Loans.—In modern banking 
practice, preference is always accorded to commercial over 
security loans.?” This is due in part to the fact that when the 
tenets of modern commercial banking were formulated in Eng- 
land in the beginning of the nineteenth century, the wholesale 
merchant was the great outstanding figure in business, and tne 
wholesale manufacturer who needed to obtain elaborate pro- 
ductive equipment by the sale of company securities had not 
yet appeared. But, although this condition has since been 
reversed, there is still sound reason for granting preference to 
genuine commercial loans over security loans. For the general 
function of commercial loans proper is to enable foodstuffs 
and merchandise to be freely and readily transported and dis- 
tributed from producer to consumer. This process is of course 
absolutely necessary not only to modern trade but even in part 
to an ability on the part of our population to exist. To take 
an extreme case, many mouths in Wall Street would soon go 
hungry if the transport of foodstuffs into New York City 
could not be readily financed. 
2 Appendix XII. 
27 See Appendix Xe.